Muar wood-based industry expects to lose RM500 mil in revenue due to MCO

11-05-2020
Furniture businesses,wood products,wood-based panels,manufacturing,impact,coronavirus,COVID-19,MCO,Muar,Malaysia

Furniture businesses and related 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 due to the Movement Control Order (MCO), reported The Edge Markets.

Muar Furniture Association president Ong Yeou Huan said that 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 who contribute to 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. Muar is home to 700 factories, accounting 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% was from wooden furniture and 15.1%, from plywood.

421 wood products companies allowed to operate so far

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.