Chemical Company of Malaysia Berhad Annual Report 2019

Moving forward, CCM will be stepping into a tough environment characterised by an imminent global recession, oil price slump and the impact of the prolonged COVID-19 pandemic and Movement Control Order (MCO) on the domestic economy. The outlook for Malaysia is a rather pessimistic one with Bank Negara Malaysia or BNM’s official forecast pointing towards economic growth of between -2% to 0.5% in 2020 with output expected to decline across all sectors, except for the services sector. Economic growth is also expected to be weighed down by output loss from the impact of COVID-19, the MCO, as well as the disruption in commodity supply. On a more optimistic note, the central bank is confident that the Malaysian economy can weather the current challenges and emerge even stronger. Apart from the broad range of policy instruments that BNM has at its disposal to ensure monetary and financial stability, several other catalysts are being tapped to support Malaysia’s economic growth in 2020. These include a RM250 billion economic stimulus package among other packages, BNM’s move to cut the overnight policy rate, the continued progress of public projects, as well as higher public sector expenditure. The government’s stimulus package alone is expected to add 2.8 percentage points to 2020’s GDP growth while the continuation of large-scale infrastructure projects (amounting to some RM15 billion) will provide an additional lift of 1 percentage point. processes in a bid to improve product quality and consistency. BUSINESS RISKS As CCM ventures forth amidst challenging market and operating conditions, we are aware of certain risks that the Group may be exposed to which could influence our operational and financial performance. For details of these key risks as well as the respective risk mitigation strategies, please turn to pages 96 to 99 and 102 to 107 respectively for the Report of the Risk Management Committee and Statement on Risk Management and Internal Control. OUTLOOK AND PROSPECTS FY 2019 was the year in which CCM made good progress in executing its strategies. Today, CCM is well positioned to further strengthen its Chemicals and Polymers businesses as well as to create long- term value for its customers and shareholders. Barring any unforeseen circumstances, we are now ready to move on to the next chapter of our journey as we explore new opportunities to deliver innovative solutions to our existing and prospective customers. However, even as we venture forth, we will do so in a measured and prudent manner considering the highly challenging operating environment or what is being been termed the ‘new normal’ that is before us. LEVERAGING ON EFFICIENCY AND AUTOMATION TO STRENGTHEN OUR COMPETITIVE EDGE TAPPING CUTTING EDGE LAB AND EQUIPMENT TO FAST- TRACK INNOVATION A new production capacity is currently being added at the Bangi site which will double the Kleeners capacity from 9,000 MT/pa to 18,000 MT/pa. The production process will also leverage on automation to enhance cost efficiencies and product quality. This will add value to the Polymers business and give it a more competitive edge. The advanced new ultra-modern laboratory for polymers R&D will enable the Polymers Division to intensify new product development as well as testing and developmental activities for industries beyond the gloves sector. The investment in cutting edge lab equipment too will help CCM fast-track R&D efforts. 27 ANNUAL REPORT 2019 BUSINESS OVERVIEW GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION