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March 5, 2009

Malaysia: Flextronics to cut1,400 jobs

Malaysia, once viewed as one of the more secure economies in Asia, suffered a new blow on Wednesday as Flextronics International readied nearly 1,400 layoffs from a plant in the Southeast Asian country.

Demand for technology exports of the kind made by Flextronics, a contract manufacturer, has plunged due to the global economic slowdown and Malaysia has also been squeezed by countries with lower labour costs, reported Reuters.

"The company reported that it was laying off the employees as it was ceasing operations at its facility in Shah Alam," a spokeswoman for Malaysia's Ministry of Human Resources told Reuters.

Companies laying off workers here need to inform the ministry and the spokeswoman said that Flextronics had notified it that it intends to lay off 1,382 workers from its assembly plant in Shah Alam, a suburb of the capital Kuala Lumpur.

Flextronics declined to comment. The Singapore-based company signalled in January it could cut jobs, hit by the global economic slowdown.

The planned layoffs come hard on the heels of redundancies in Malaysia at Western Digital, Intel Corp and Japanese electronics company Panasonic Corp.

Although Malaysia's official unemployment rate is just 3.3 percent, the spate of layoffs and the prospect of more as exports plunge has rattled the government here as it readies a multibillion package of spending to stem the effect of declining demand for exports.

Electronics account for close on 40 percent of Malaysia's exports, which are forecast to fall 24.8 percent in January from a year earlier, according to a Reuters poll released ahead of data due on Friday.

According to a ministry official, around 45,000 workers have been laid off in the electronics industry since the start of the year.

Malaysia's economy is teetering on the brink of recession after data last week showed that the economy grew at is slowest pace in eight years in the fourth quarter, just 0.1 percent year-on-year.

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