A recent report by Hong Leong Investment Bank (HLIB) Research has provided a positive outlook for the Malaysian furniture industry in 2022, although it will continue to face some challenges.
The general outlook is due to a number of factors that include the relaxation of movement restrictions which allows furniture manufacturers to resume operations and address their supply chain issues.
There is also robust demand in North America driven by work from home arrangements and the trade diversion from the United States-China trade dispute. However, challenges such as rising raw material costs, persistent labour shortage and concerns on labour practices continue to cloud the outlook, according to the HLIB Research.
Furthermore, due to severe flooding in parts of Peninsular Malaysia in mid-December 2021, rubberwood harvesting and transport are still disrupted, so prices for logs and sawnwood are likely to rise. The research unit noted that the country’s wooden furniture export earnings in the first 10 months of 2021 declined by almost 3% year-on-year to RM8.15 billion, due to the lower production from June to mid-September 2021 as a result of movement restrictions.
The US continues to be the largest export market, making up 62.8% of the total export value. Costs of raw materials like rubberwood, glue, steel, foam, leather and packing materials have been on an increasing trend since Q4 2020.