According to FIRA’s research, Malaysian imports to the UK accounted for roughly 2% of the total in 2011. Malaysia’s oak furniture contribution to the UK market may have decreased in recent years, but the country remains a steady source of cabinet furniture – principally rubberwood. In this article, featured courtesy of Furniture & Furnishing Export International, Furniture News explores the characteristics and likely direction of the Malaysian furniture trade …
Malaysia’s furniture industry has played a key role in the country’s economy since the late 1970s, when its Government began encouraging its development through investment in infrastructure, and providing incentives for Malaysian furniture manufacturers to export.
The Malaysian furniture industry grew – both in terms of consumption and production – in recent times, until the global recession brought about a drastic contraction in the sector in 2009. However, the Malaysian furniture industry is in a good position to recover from the current economic difficulties due to three main factors: the abundance of raw material resources; the presence of a qualified workforce; and its attractiveness to foreign investments.
The third Industrial Master Plan (IMP3) was implemented in 2006 by the Ministry of International Trade and Industry (MITI) Malaysia. Its aim is to achieve long-term global competitiveness through the transformation and innovation of the manufacturing and service sectors. It is a 15-year plan, and the wood-based industry was one of 12 manufacturing industries targeted for further development and promotion.
“While lower-priced Chinese and Vietnamese furniture poses strong competition, Malaysian furniture continues to set itself apart through its quality and reliability”
As part of this plan, RM27.5b (US$8.88b) will be invested every year into the manufacturing sector. It is hoped that it will attain the targeted annual growth of 5.6% as a result of the IMP3.
Ranked as the world’s 10th largest exporter of furniture, Malaysia exports around 80% of its national furniture production. Malaysia enjoys a strong position in the global furniture industry, and its main export markets are the US, Japan and Singapore.
Of late, Malaysian furniture manufacturers have experienced tremendous growth in exports to the UAE, Saudi Arabia, the Philippines and Russia. Indications are that Malaysian furniture manufacturers are now looking to countries like Algeria, Puerto Rico and Libya as their next target markets.
Malaysia has always been renowned for its wood-based furniture, owing to the country’s natural resources. The Government has set an annual growth target of 6.5% for wood-based furniture, with the industry estimated to grow to RM53b (US$17.1b) by 2020. In recent years, the growth has shifted from producing general products to locally-designed furniture.
According to the organiser of the Malaysian International Furniture Fair (MIFF), this shift has led to better recognition from the international furniture scene of Malaysian furniture-makers and designers. MIFF’s organisers also add that foreign buyers have often looked to Malaysia for manufacturers who can meet their high production demand, and many of these buyers are in the middle-to-high category.
Despite economic downturns, the industry is still supported by strong global demand. Additionally, the Government nurtures the industry by providing tax exemptions and investment tax allowances to facilitate business operations.
While lower-priced Chinese and Vietnamese furniture poses strong competition, Malaysian furniture continues to set itself apart through its quality and reliability. Many of its manufacturers are putting greater emphasis on developing original designs that place importance on aesthetics as well as ergonomics.
“Ranked as the world’s 10th largest exporter of furniture, Malaysia exports around 80% of its national furniture production”
There is much room for growth in terms of domestic consumption for the furniture industry. However, the major export destinations remain the US, Japan, Singapore and Australia, with Asia in particular growing in importance for Malaysian furniture exports due to booming population figures.
Furniture & Furnishing Export International, published by APS Media Group, brings readers in Asia-Pacific, the Middle East and Europe the latest in industry developments, and is also the member of the International Alliance of Furnishing Publications (IAFP) representing Singapore and Malaysia.
In figures
Official statistics in Malaysia indicate that the country’s real GDP growth in 2011 was 5.2%, which was a slight underperformance in comparison to 2010’s real GDP growth figure of 7.2%. However, in 2011, total exports amounted to US$212.7b, representing a 10.1% increase from total exports in 2010, which amounted to US$197b. Net exports for 2011 and 2010 were relatively unchanged, at US$44.7b and US$44.4b respectively.
Industry data from the Malaysian External Trade Development Corporation (MATRADE) shows that Malaysia’s furniture exports for 2011 (excluding December) amounted to US$2.3b, which was a slight dip from 2010’s figure of US$2.4b, reflecting a 4.6% decrease in export sales by Malaysian furniture manufacturers.
Total furniture imports for 2011 were US$400.7m, an increase from 2010’s figure of US$390.8m. The biggest import market in 2011 was China, which supplied Malaysia with 37.4% of its total furniture imports.
Likely directions
According to Furniture & Furnishing Export International, the world trade of furniture is likely to amount to around US$122b for 2012, and US$128b this year – and Malaysian furniture consumption in 2013 is expected to increase by 6% compared to 2012.
Sarimah Muhamad Sabudin, who was appointed CEO of the Malaysian Furniture Promotion Council (MFPC) last November, identifies that the biggest challenge for the country lies in changing the mindsets of the Malaysian manufacturers – the majority of them started out as Original Equipment Manufacturers (OEMs), and the MFPC believes that they should transform into Original Design Manufacturers (ODMs) and Original Brand Manufacturers (OBMs). According to Sarimah, product design and branding is viewed as an expense rather than an investment by many manufacturers in Malaysia.
She also noted that the Malaysian furniture industry is currently facing a shortage of labour, high labour costs and high costs of raw materials.
Sarimah says that the furniture industry is a dynamic industry within the Malaysian timber and timber products sector, pointing out that furniture exports increased yearly from RM5.08b (US$1.66b) in 2001 to RM7.67b (US$2.47b) in 2011. In that year, it contributed 33.8% of the timber and timber products’ total export value.
The National Timber Industry Policy aims to achieve RM53b export value from the timber and timber products sector by 2020, with furniture export expected to contribute RM16b (US$5.2b). In this context, the furniture industry’s productivity needs to be stepped up by 7.6% per annum from 2011 in order to achieve the export target.
However, the emergence of Vietnam and the People’s Republic of China as lower-end producers has eroded Malaysia’s competitiveness in the export of furniture.
Malaysia Pride
In 2012 the Malaysian Furniture Promotion Council (MFPC) launched the Malaysia Pride initiative to promote the best of Malaysian-made furniture. A council spokesman said that the Malaysia Pride initiative was meant to be a global quality mark for the Malaysian furniture industry – it aspires to bring together furniture players representing the best of Malaysian furniture manufacturers, and is given only to those that meet the required criteria in offering excellent furniture products.
Events
MIFF (Malaysia International Furniture Fair) regarded by most as the country’s leading show – and certainly one of the best-established in the world – takes place between 5-9th March 2013 at the PWTC and MECC, Kuala Lumpur
EFE (Export Furniture Exhibition) is held between 6-10th March 2013 at MAEPS, on the outskirts of Kuala Lumpur
SEAFIE (Southeast Asia Furniture & Interiors Import/Export Exhibition) will make its debut at Kuala Lumpur’s PWTC from 13-16th September 2013 – the show is focused on the ASEAN market, and, like MIFF, it is organised by UBM
