The Malaysian Polypropylene Industry Outlook In Facing ASEAN Free Trade Area (AFTA) Deregulation

Abstract

The objective of this study is to focus specifically on the Malaysian polypropylene industry’s performance in order to further understand the current situation. As the future of the plastics industry is becoming more competitive due to the uncertainties of the global economy, it is hoped that this study could help to assist the Malaysian polypropylene industry to understand the future potential challenges better. Another aspect of the future challenges for the industry is the lifting of the trade barrier within the ASEAN countries. By early 2003, the ASEAN Free Trade Area (AFTA) has imposed in the ASEAN regions and there will be little or no tariff at all between the ten ASEAN countries. Based on the survey’s results, the Malaysian polypropylene industry is still very much dependent on the domestic market. The overall domestic market share commands about 60% of the total business. The trend to expand the export market is still in progress and in line with the overall Malaysian plastics industry. At the moment, only the large polypropylene industries are very aggressive in capturing the export market. If the current market segmentation of the overall industry is maintained, the AFTA deregulation could affect the future outlook of the industry as the alternative domestic market is not available in time in case of any penetration happens to this major market segment. As the small and medium polypropylene industries are very much dependent on the domestic market, they could be the first segment of the industry that would face the immediate effect or challenges of AFTA to the industry.