Malaysia's plastics industry faces subdued machinery demand as Vietnam emerges as a major regional market

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Highlights

Malaysia's plastics industry recorded a 3.24% decline in annual sales to RM62.7 billion in 2025, although exports rose 1.15% to RM17.5 billion.
Approved investment in plastic products surged 174.8% to RM4.85 billion in 2025, with foreign investment nearly quadrupling to RM3.56 billion.
Machinery demand in Malaysia remains subdued compared with Vietnam, while local manufacturers are increasingly turning to cheaper Chinese equipment to automate.

This article was translated from the original. Read the original version by our correspondent here.

Market signals from TaipeiPLAS 2026

As reported by The Edge Malaysia, international machinery suppliers at TaipeiPLAS 2026 described demand in Malaysia as moderate to flat, while Vietnam was repeatedly identified as a market offering faster growth in Southeast Asia. Held from 15 to 19 Sept, the exhibition brought together injection moulding machines, extrusion lines, industrial chillers and automated production systems, but the overall mood was seen as more subdued than expected.

Stephen Ho, regional manager at Fu Chun Shin Machinery Manufacture Co Ltd, said the company's sales to Malaysia had fallen significantly compared with previous years. He said the market was now more cautious about capital spending, with customers placing greater emphasis on costs and the time needed to earn a return on investment.

Arburg described Malaysia's plastics market as "steady", although its business in the country has grown over the longer term through sales, training, technical services and spare parts. Reifenhäuser also said Malaysia was growing, but was not the region's fastest-growing market, with Vietnam seen as having greater potential on the back of industrial expansion and demographic factors.

Industry data also paint a mixed picture. According to the Malaysian Plastics Manufacturers Association, the industry's annual sales fell 3.24% to RM62.7 billion in 2025 from RM64.8 billion a year earlier, while exports rose 1.15% to RM17.5 billion. The association's 2026 annual report puts the number of manufacturers at 1,400 companies, employing 167,000 people.

Organiser figures also point to a smaller exhibition than in the previous edition. TaipeiPLAS 2026 recorded 354 exhibitors across 1,366 booths and 7,543 visitors, including 993 international buyers from 77 countries, down from 2024, when it had 496 exhibitors, 1,844 booths and 12,672 visitors.

Cost and labour pressures, and moving up the value chain

Despite subdued sentiment around machinery demand, data from the Malaysian Investment Development Authority show that approved investment in plastic products surged 174.8% to RM4.85 billion in 2025 from RM1.76 billion in 2024. The number of projects rose to 115 from 91, while foreign investment nearly quadrupled to RM3.56 billion from RM900.9 million.

However, exhibitors in Taipei highlighted labour availability as one of manufacturers' main concerns. Several suppliers said difficulties in finding workers, along with labour and operating costs, were influencing production-location decisions and causing some investment decisions in Malaysia to be put on hold.

At the same time, competition from Chinese machinery manufacturers is intensifying. Several Taiwanese suppliers said customers in Malaysia were now more price-sensitive and increasingly open to cheaper Chinese equipment, although some other manufacturers stressed that productivity, reliability and the ability to meet the needs of higher-value production should not be sacrificed for a low upfront price.

For local manufacturers, cheaper machinery could also accelerate modernisation, particularly for smaller companies looking to automate older production lines. Malaysian Rubber Products Manufacturers Association president Yeaw Kok Kwey said manufacturers were increasingly assessing Chinese equipment in terms of price, automation, efficiency and ease of operation, in line with efforts to upgrade facilities and invest in automated inspection, cutting, injection moulding and measurement systems.

Malaysia's long-term prospects depend on its ability to move beyond commodity products towards more advanced materials and applications. Under the Chemical Industry Roadmap 2030, engineering plastics have been identified as a strategic area, with Malaysia targeting a 30% share of Southeast Asia's engineering plastics demand by 2030, compared with a baseline of around 15%.

Federation of Malaysian Manufacturers deputy president Datuk Andrew Goh Boon Kim said Malaysia and Taiwan could deepen cooperation in advanced materials, machinery, automation, recycling technology and supplier development. Drawing on Malaysia's petrochemical base and Taiwan's machinery expertise, technical cooperation and training could help local manufacturers move up the value chain and use new technologies more effectively.

The trade relationship between the two economies is also strengthening. According to figures cited by the Ministry of Investment, Trade and Industry, Malaysia's total trade with Taiwan reached a record RM233.02 billion in 2025, spanning electronics, machinery, equipment, parts and various other products.

In our earlier coverage of Budget 2027's focus on strengthening the high-value semiconductor industry, we explained how funding allocations are targeted at helping local companies move beyond assembly and testing activities into segments such as integrated circuit design and R&D. We also highlighted the government's emphasis on delivering investment projects, strengthening local supply chains and ensuring productivity gains translate into wage increases.

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