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MALAYSIAN FURNITURE SPECIAL

What started out as a domestic driven, cottage-based industry in the early 80s, the Malaysian furniture industry has grown to become the world’s eighth largest exporter today. A significant contributor to the country’s export earnings, great efforts are taken by both the government sector as well as the industry itself to continue the development and growth. This article features three organisations instrumental in the advancement of the Malaysian furniture industry, past present and future.


MALAYSIA EXTERNAL TRADE DEVELOPMENT CORPORATION (MATRADE)




Jason Wu,
Founder and Director,

The national trade promotion agency of Malaysia, MATRADE is the lead organization promoting Malaysian exports. It has enabled many of its local companies to carve new frontiers in the global markets. An active promoter of Malaysian furniture overseas, its contributions to the export of the country’s furniture has been very significant.

According to Dato Zulkifli Mahmud, CEO of MATRADE, the promotion of Malaysian furniture export is part of MATRADE’s efforts to promote value-added products since Malaysia is rich with local resources.

To help the furniture sector, MATRADE has various tools at its disposable. One of them is the signature business matching initiative called International Sourcing Programme (INSP), which matches local suppliers with foreign buyers. Complementing this are trade missions abroad. With a vast network of 46 trade offices around the world, the agency is able to scout for the best potential business partners for Malaysian companies.

MATRADE has also been actively supporting and endorsing promotional export programs run locally. One of which is specific to the furniture sector is the EXPORT FURNITURE EXHIBITION (EFE) fair, an event organized by EFE Expo Sdn Bhd, an event arm of the Malaysian Furniture Council (MFC). In addition to the business matching programs, the agency takes concrete step to bring in international buyers who are sourcing for Malaysian furniture to Kuala Lumpur to attend the fair. Dato Mahmud believes that with the ASEAN Free Trade Area providing optimal business environment, such events are the market place for the global furniture industry.

An all-rounder, MATRADE also organizes its own events and this year, they will introduce furniture as a new segment in INTRADE, an annual trade show to be held 2nd – 5th November 2016 in Kuala Lumpur. INTRADE is unique as it combines a trade event for the lifestyle sector of which includes furniture and a series of fashion shows through the Malaysia Fashion Week.

Last year, MATRADE had organised an outbound program for furniture exporters to Mumbai and a series of inbound visit with buyers from Russia, India, USA, Nigeria, Japan and Korea to meet furniture manufacturers in Malaysia. All of these efforts serve one purpose - to generate export sales for the country and its companies. As the global market becomes ever more competitive, Dato Mahmud offered some useful advice to Malaysian exporters. “In a competitive marketplace, local furniture producers need to offer unique, functional and premium furniture to cater for the fast changing global consumer market. Innovative and creative designs are of utmost importance to stand out.” He said.

According to Dato Mahmud, the main challenge facing the furniture sector is its ability to keep up with meeting huge orders as some may not have the required capacity. In this sense, investment in technology is very important, especially when Malaysia is moving away from labour-intensive manufacturing. Furthermore, there is also price competition with Indonesia and China that are offering cheaper products. However, as global buyers are becoming more affluent and seeking quality furniture, this is where Malaysia will fare well with an established reputation as producers of quality products.

For many years, MATRADE offers various incentives to help Malaysian companies sustain and enhance their export business. These incentives cover both financial and non-financial. For financial assistance, MATRADE offers Market Development Grant or also known as MDG, Services Export Fund (SEF) and eTRADE Program (this program helps subsidised participation fee in selected e-marketplaces).

For non-financial incentives, MATRADE organises a series of capacity building program which aim to equip exporters with necessary knowledge and skill sets in undertaking export business. Program organised include briefings and trade talks on market opportunities in a particular export market/region, workshops on certifications and standardisations as well as training on step by step for exporting, among many other subjects.

The outlook for Malaysian furniture export is good. For the first 6 months in 2016, export of furniture recorded a double digit growth which amounted to 10.1%. Furniture is the second major exported lifestyle products and was worth RM 9.14 billion in 2015.

According to Dato Mahmud, the increase in the export of furniture are attributed by weak Ringgit (resulting in stronger demand) and higher exports to traditional markets such as the USA, Japan, Singapore, Australia and UK. “We are confident that the figure will improve consistently as there are various initiatives being carried out by both public and private sector to promote this industry. I can’t reiterate enough the importance for local manufacturers to develop outstanding and unique designs that are excellent in quality. When priced competitively, our furniture will continue to be well accepted globally.” he added.

Going forward, Dato Mahumd said that apart from branding and marketing Malaysian capabilities in the furniture sector, MATRADE is planning seminars and talks to inform the furniture industry on opportunities as well as organise more INSPs through its in-house events as well as through collaborations with locally organized international fairs such as EFE next year. “With the current global economic challenges, we need to find ways to continue matching local companies with international buyers at a cost-effective manner and the INSP will help save a lot of cost as we are hosting the international buyers here in Malaysia.” Looking at how things are going, not only the exhibitors but buyers globally will be thankful for MATRADE’s effort.

MALAYSIAN TIMBER COUNCIL (MTC)



Datuk Dr. Abdul Rahim Nik,
CEO, MTC
Established in 1992, the Malaysian Timber Council (MTC) leads the country’s promotion of the development and growth of the Malaysian timber trade. It is also responsible for the development of markets for timber products globally. The Malaysian furniture industry, with its heavy reliance on wood as raw material, is a strategic component of the timber business. As a key industry successfully bringing home significant foreign earnings each year, the furniture sector is naturally one which the council grooms with great care.

MTC is helmed by its CEO, Datuk Dr Abdul Rahim Nik, a veteran with tremendous knowledge and experience in the timber and forest industries. Prior to MTC, he served in senior positions in various agencies with the most recent as Deputy Secretary General of the Ministry of Natural Resources and Environment (NRE) for five years. Earlier he was the Deputy Director General of the Forest Research Institute of Malaysia (FRIM), an organisation he served for a total of 25 years.

According to Datuk Dr Rahim Nik, one of his immediate task is to expand market opportunities for the export of timber and timber products with a target set at MYR53 billion or approximately USD12.5 billion under NATIP to be achieved by the year 2020. This amount includes MYR16 billion set for the wood-based furniture industry. Prospects of meeting the seemingly high targets are good, he said. In 2015, there was an increase of 6.5% from MYR20.5 billion to MYR22.1 billion over the previous year. The top three main products exported were wooden furniture (MYR7.3 billion), plywood (MYR4.7 billion) and sawn timber (MYR3.2 billion). The first five months of the year 2016 has already showed an increase of 3.8% to MYR9.1billion over the same period last year..

In order to achieve the ambitious overall target, elaborate programs are planned for each of the component industries. MTC has been relentless in its support to the furniture sector. One of its key programs has been to help furniture companies enhance their production capabilities, such as the absorption of some freight charges for companies that import new machines, Datuk Dr Rahim Nik enthused. Such incentives aim to encourage local timber furniture manufacturers to adopt automation and advanced machineries for greater efficiency and higher productivity. This also helps reduce manufacturers’ heavy reliance on human labour, which is in acute shortage in the country.

Another major effort of MTC to help the furniture sector is its international marketing program. Business-to-business marketing missions are organised on a regular basis according to Datuk Dr Rahim Nik. Prospective overseas furniture importers are brought to meet Malaysian furniture companies in face-to-face business meetings in Malaysia.

There is also the international fairs program, another effective and highly popular activity. For overseas events, the council identifies suitable markets and organises national pavilions at important exhibitions held in these markets. Malaysian exporters are encouraged to participate in these shows and are provided attractive incentives such as sponsorship on exhibition space and shipment.

For example, MTC is organising a 750sqm Malaysian Pavilion in the upcoming Furniture China fair in Shanghai this September with 18 companies in participation. The council is sparing no effort to ensure the success of the pavilion. To maximise the impact of their participation, a large billboard will be put up to boost visibility for the pavilion and Malaysian companies. The council’s last pavilion at the 2015 event generated MYR36 million in on-site sales and this time the target is set at MYR40 million.

MTC is equally supportive of local events which cater to an international audience. For example, it has been an invaluable supporting organisation critical to the success of Export Furniture Exhibition (EFE), an international fair organised by EFE Expo Sdn Bhd, an events arm of the Malaysian Furniture Council (MFC). MFC is a national body that represents the Malaysian furniture industry.

An annual four-day export-oriented event, EFE serves as an important platform to help Malaysian furniture companies establish themselves as credible exporters to attract buyers worldwide. The last event reported USD704 million of sales (onsite and follow-up) which is a high percentage of the country’s annual export figure. Not only does MTC act as a major sponsor to the event, the council also identifies and brings foreign buyers to the show, a boost for the show.

Available figures show these efforts by MTC have been paying off. The wooden furniture industry has shown robust growth based on data from the past 5 years. With the exception of the year 2013, there have been increase in the value of wooden furniture export every year since 2011. Last year’s wooden furniture export reported 14.5% increase. This positive trend explains the CEO’s positive outlook on the industry. However neither the council nor the industries it supports are resting on their laurels.

MALAYSIAN FURNITURE COUNCIL (MFC)



Chua Chun Chai,
President, MFC
Anational association representing the Malaysian furniture industry, Malaysian Furniture Council (MFC) was formed as the result of a merger between the Malaysian Furniture Entrepreneurs Association (MFEA) and the Malaysian Furniture Industries Council (MFIC). In addition to uniting the country’s furniture industry, MFC’s key objectives include promotion of the development of Malaysian furniture and its export.

According to Chua Chun Chai, president of MFC and managing director of Hup Chong Furniture Sdn Bhd, a leading exporter of wooden home furniture, the council serves many roles. For example, it acts as a platform to gather industry feedback and opinions and as a channel of communication between the industry and government agencies.

Without a doubt, MFC as well as its predecessors have been invaluable resource to the Malaysian government in their efforts to identifying opportunities and challenges with regards to the furniture industry. In turn, this aids the relevant agencies in strategizing industry related policies to address those opportunities and challenges.

Although blessed with a strong forestry sector and thus abundance of wood materials for the manufacturing of furniture, the Malaysian furniture industry is confronted with various issues such as shortages of labour, skills training and even raw material supply, quite unbelievable to the uninitiated. This issue on raw materials supply comes about because as a free market, Malaysian furniture manufacturers do have to compete with foreign wood importers for supply. Senior members of MFC sit on boards of various related agencies to lend their knowledge and expertise in this respect. Thankfully, through its many efforts, the council has maintained an effective channel of communication both with the industry and the various government agencies. In general, the process of gathering information on the ground as well as conveying industry needs to the government has been smooth.

According to Chua, the Malaysian furniture export is doing very well in traditional markets like USA, Singapore, Japan, Australia and UK. With regards to new markets, MFC plans to help the industry penetrate the burgeoning Chinese market. For years, Malaysian furniture companies have capitalized on the strengths of international trade fairs and they have appeared in most major shows globally. For China specifically, there have been strong Malaysian presence in CIFF (both Guangzhou and Shanghai), Furniture China past and present. However, these efforts have mainly been geared towards selling to foreign buyers visiting the Chinese events. With the new angle, MFC has been engaging Chinese counterparts differently. In the past few years, MFC has led furniture companies to a local show in Chongqing. MFC has successfully aided local companies in securing a special showcase in a Nanning furniture fair to be held in the middle of September. This event is organized by the Chinese HOBA group and carries the prospects of long term collaboration.

Looking back, 2015 saw a 14.1% increase in Malaysian furniture export, 5.2% higher than 2014. China was 14th on the Malaysian export country list in 2014 and it jumped to 10th position in the year 2015. Barring any hiccups, the numbers will keep improving. Overall, Chua is optimistic the Malaysian furniture industry will achieve the target of $16 billion Riggit Malaysia in export revenue by the year 2020.

EXPORT FURNITURE EXHIBITION (EFE)



Chief amongst the many tools MFC has on hand to aid its export development program for the industry is EFE Expo Sdn Bhd, a wholly owned subsidiary of the council that organizes the renowned Export Furniture Exhibition (EFE) fair. Serving a dual role, Chua also doubles as chairman of this arm steering strategic directions of the company and event. Chua is most enthusiastic about the EFE fair and the progress it has achieved. He shared proudly that EFE has grown to become a leading exhibition in the region and has been instrumental in promoting Malaysian furniture to buyers globally.

The fair which is held every March showcases some of Malaysia’s best companies and products to buyers coming from all over the world. The last event received a total of close to 6000 foreign visitors and generated US$703 million in sales. EFE is the fair to visit for both bulk orders and mixed containers at competitive price points. The event is held at the KLCC Convention Center, a five star venue in the city centre. Despite the high costs, exhibition space is priced at some 30% less than competing shows, another effort meant to help the local industry. This savings enjoyed by the exhibitors can in turn be invested in more space to showcase a greater variety of products or to provide buyers with yet greater value.


Already in its 12th edition, the EFE exhibition saw an increase in visitors from overseas and domestic alike in comparison its previous editions. Chua guaranteed that as organisers of EFE, they will spare no effort in enhancing the event and helping exhibitors and buyers do better business. The next event, the 13th EFE, will be held 8-11 March 2017 at the KLCC Convention Center in Kuala Lumpur, Malaysia.

The Export Furniture Exhibition (EFE), one of Southeast Asia’s largest annual industry trade shows, returns next year to be held from March 8-11. Exhibitors taking part will enjoy exclusive privileges for the bigger, inspiring and exciting show.

Marking its 13th edition, the 2017 fair will once again be held at the Kuala Lumpur Convention Centre (KLCC). It seeks to continue its growth as one of the region’s most prominent global furniture sourcing centre for buying professionals from all over the world. The last edition received visitors from 135 countries and regions.

More than 300 exciting exhibitors from Malaysia, China and ASEAN countries will showcase top quality modern and contemporary furniture with their latest collections and designs for bedrooms, living areas, kitchens, bathrooms, children, office, dining, outdoor living, hotel furniture, occasional including furniture fittings and accessories. EFE 2017 with 8 halls in total will have a gross exhibition space of 30,000sqm to connect buyers with world market leaders.

For the first time, the 2017 event will feature an “India Export Pavilion.” The objective of this pavilion is to provide exhibitors the opportunities to sell to the world’s largest democratic country. India is one of the fastest growing major economies today and the second most populous country in the world with more than 1.2 billion people. It is also the world’s 7th largest country by area, the 7th largest economy by nominal GDP and the 3rd largest by purchasing power parity (PPP). The Indian furniture market is estimated to be worth USD17,922 million and Malaysia’s furniture export to India in 2015 was ranked number 6th after UK with MYR344.6 million in value. Opportunities for export of furniture to India are huge with its increasing demand, fuelled by the boom in the Indian housing and commercial construction, increasing income levels and influence of global lifestyle trends. Hopefully, Malaysia can ride on India’s growth with the presence of the India Export Pavilion at EFE 2017 and will further increase furniture exports to India.

EFE, Malaysia’s premier destination for the furniture industry, is a key buying and networking event in the furniture calendar. Presented by the Malaysian Furniture Council (MFC) and organized by EFE Expo Sdn Bhd, a wholly owned company of MFC, EFE is a platform of opportunities for the industry by the industry.