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Muar wood-based industry expects to lose RM500m in revenue

08 May 2020 / 15:51 H.

KUALA LUMPUR: The furniture business and associated players in the wood-based industry in Muar, Johor have been affected in the first quarter of this year, expecting to lose about RM500 million in revenue, following the Movement Control Order (MCO).

Muar Furniture Association president Ong Yeou Huan said as the wood-based industry is categorised as non-essential, its operation was disallowed during the MCO.

“By not being in operation for 28 days, the furniture factories in Muar are expecting losses amounting to RM500 million, in addition to fines due to potential violation of agreements of approximately RM10 million,” he said in a newsletter published by the Malaysian Investment Development Authority (MIDA) today.

Ong said for the past 20 years, the wood-based industry has become one of the major revenue contributors to Malaysia’s economic growth.

The industry currently employs approximately 240,000 workers, encompassing the production of sawn timber, veneer, panel products (plywood, particleboard, chipboard, and fibreboard), mouldings, and builder joinery and carpentry, as well as furniture and furniture components.

“Furniture companies in Muar play a critical role in contributing to Malaysia’s exports of wood and wood products, accounting for 60 per cent of the export value,” he said, noting Muar houses 700 factories that account for up to 50 per cent of the country’s furniture exports.

In 2019, Malaysia exported wood and wood products valued at RM22.5 billion. Of this, 40.6 per cent was from wooden furniture and 15.1 per cent, from plywood.

Nevertheless, Ong said the Malaysian Timber Industry Board (MTIB) has been mandated by the Plantation Industries and Commodities Ministry to evaluate and approve companies in the wood-based industry to operate during the MCO, particularly to fulfil agreed-upon contracts.

He said submission of applications to MTIB began on March 21, with the main evaluation criteria being the penalty for breaching the export agreement/contract and preventing huge losses for exporters.

Several companies had been approved on a case-by-case basis, especially manufacturers that were suppliers of essential products, he said.

To date, a total of 421 companies have been approved to operate during the MCO, he added. - BERNAMA

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