Manufacturers warned that weak global growth prospects meant the industry was likely to grow o­nly two percent this year, compared with a five percent official forecast.

The Iraq war and a killer pneumonia outbreak have dealt a double blow to the semiconductor industry, the backbone of the manufacturing sector, said the Federation of Malaysian Manufacturers (FMM) vice president Paul Low.

Manufacturers have to bear higher insurance premiums due to war risks and orders for mostly electrical goods from the Middle East have been cancelled, he said.