Khairuddin noted that furniture products made up the highest export
at RM9.14 billion followed by plywood products (RM3.40 billion) and
sawn timber (RM3.37 billion). — Bernama photo
The time is right for furniture makers to thrive, analysts say, as a
rise in global furniture demand on the back of rising population,
urbanisation, disposable incomes and real estate will spill over onto
An increase in furniture demand globally signifies growth
opportunities for the furniture industry in Malaysia as consumers may
opt to purchase imported furniture due to factors such as product
pricing, design and quality.
In line with the increasing furniture demand globally, researchers
at Public Investment Bank Bhd (PublicInvest Research) saw that demand
for Malaysian furniture products has also increased, as depicted by
Malaysia’s growth in furniture exports.
“The furniture industry has consistently contributed between 0.3 to
0.4 per cent to Malaysia’s GDP,” PublicInvest Research said in a special
report on the sector.
Malaysia has always been a net furniture exporter and is ranked
amongst one of the top 15 largest furniture exporters worldwide.
In 2019, Malaysia is the 11th largest furniture exporter in the
world. Around 80 per cent of Malaysia’s furniture production is exported
with US, Japan and Australia being the major export markets.
Plantation Industries and Commodities Minister Datuk Dr Mohd
Khairuddin Aman Razali noted that Malaysia exported RM22.5 billion worth
of wood-based products last year.
Of the amount, furniture products made up the highest export at
RM9.14 billion followed by plywood products (RM3.40 billion) and sawn
timber (RM3.37 billion).
“We hope that the value of exports this year will increase or at
least matches last year’s figure,” he told reporters after launching the
state’s Community Plantation programme in Batu Kikir.
Boon from global trade war
Malaysian furniture industry has its advantages when it comes to
product creativity as designers are able to churn out unique designs and
therefore attract furniture retailers and theme decorators despite
charging premium margin.
“Malaysian furniture industry manufactures several types of
furniture products such as wooden and cane furniture as well as metal
furniture,” PublicInvest Research opined.
“However, in terms of value of gross output of the furniture
industry, wooden and cane furniture is the largest segment due to the
abundance of tropical wood found in Malaysia especially rubberwood.”
And this robust demand for Malaysian-made furniture is set to continue, especially from the US.
Prior to the trade war, Malaysia furniture exports were growing at a
eight per cent-year cumulative annual growth rate (CAGR) of 3.3 per
cent between 2009-2017, in tandem with the growth in the global
Moving forward, PublicInvest Research believe that the growth in
furniture exports will be mainly driven by the increase in demand for
Malaysian furniture in the US as exports to the US grew by 44.7 per cent
year on year (y-o-y) to RM4.2 billion in 2019.
“Although 2020 demand is expected to be disrupted by the impact of
Covid-19 pandemic, we are of the view that Malaysian furniture will
continue its growth in 2021 once global economy recovers and reverts to
normalcy,” it supported.
“According to US Census Bureau, the furniture industry has been
growing steadily at a CAGR of 5.7 per cent in between 2010 to 2019.
Demand for furniture is still robust as US furniture imports have been
on a steady rise.
“According to Statista, the US furniture market is expected to grow
at a CAGR of 4. per cent from 2020 to 2023 on the back of the uptick in
US homeownership as it has been recovering gradually post subprime
Malaysian furniture and wooden furniture export (SOURCE: Malaysian Timber Council)
Breakdown of Malaysia furniture exports in 2019 (SOURCE: Malaysian Timber Council)
Opportunity to fill the void
Since the US imposed a 25 per cent tariff on Chinese furniture
manufacturers, Malaysian manufacturers have seen an increase in orders
as a result of trade diversion – exports to US jumped by 38 per cent to
US$4.7 billion in 2019.
“Although the US furniture imports has fallen since the Covid-19
outbreak, we believe as the global economy reverts back to normalcy,
household spending on furniture should gradually increase as evident by
the rebound of 17.7 per cent month on month (m-o-m) in May retail sales.
“Furniture consumption per capita is on the rise especially in the
US as it has always been the largest furniture consumer and importer
“We believe that this trend is likely driven by the booming real
estate industry supported by the growth in the US new housing starts as
well as the increase in disposable income. This has led to an increase
in demand for premium furniture.”
Additionally, a favourable foreign exchange rates will further boost Malaysian furniture.
As the ringgit depreciates against US dollar, Malaysian furniture
will appear more appealing to customers due to cheaper product prices,
as shown where Poh Huat, Homeritz and Wegmans cumulative earnings rose
in tandem with RM weakening.
Meanwhile, PublicInvest said prices of rubberwood, a main raw
material used, had fallen and stabilised since the export ban in 2017.
Given the ample supply of rubberwood as well as falling leather
prices, the research firm expects an improvement in margins due to lower
raw material costs.
This reaffirms its stance that exporters would likely benefit from the weak ringgit against the US dollar.
“We estimate that for every one per cent drop in the ringgit,
earnings for the furniture stocks under our coverage would increase by
0.8 per cent.”
Listed furniture makers stand to gain
While the global furniture trade has been affected by trade tensions
and weaker economic growth, demand for household furniture in the US
remained strong, driven mainly by sustained employment, rising household
income and a resilient housing sector.
This means furniture makers like Poh Huat Resources Holdings Bhd (Poh Huat) stand to gain from this uptick.
“Upbeat economic data on the labour market, housing, trade and
manufacturing that had suggested that the US economy was growing at a
moderate speed despite headwinds from trade tensions and slowing global
growth,” Poh Huat cited in its Annual Report 2019 released this year.
“Strong consumer spending on discretionary, including household and
furniture, have resulted in sustained orders for both our Malaysian and
“The protracted US-China trade war has resulted in disruptions in
the global supply chain but bought about some positive surprises to
several countries in the South East Asia region.”
For the global furniture trade, Poh Huat believed that Vietnam will
benefit the most, with furniture exports increasing by 30 per cent this
year, followed by Malaysia as orders shift to these Southeast Asia
“The structural changes in the supply chain is now permanent as more
and more manufacturers relocate out of China to this region.”
In Vietnam, Poh Huat said it continued to receive sustained orders
from our US customers particularly for our new ranges of bedroom set and
Responding to the trade tariffs imposed by the US on China sourced
furniture, it said several key customers have shifted some of their
ranges of bedrooms suites and occasional items which were previously
sourced from China factories to our factories in Vietnam.
“While the diversion of orders from China to Vietnam have resulted
in more orders, negotiations for better pricing have not been fruitful
as competition amongst furniture manufacturers in Vietnam has
intensified over the last couple of years,” it added.
“Chinese and Taiwanese furniture manufacturers have over the years
progressively invested and built up capacity in Vietnam while local
Vietnamese manufacturers have gained strengths to become formidable
competitors, especially in the affordable segment of the market where
barriers to switching are relatively low.
“Our Malaysian operations continue to record higher shipment of office and home furniture, particularly to Canada and US.”
Wegmans expect uphill battle
On a more sombre tone, ACE Market-listed Wegmans Holdings Bhd
(Wegmans) believes that 2020 will be a challenging year, due to the
uncertainty of the US monetary policy in the global economy, the
slowdown of China’s economic growth and the trade war between China and
the US which have affected the global economic stability.
This comes as the furniture industry is particularly sensitive to
cyclical variations in the general economy and to uncertainty regarding
future economic prospects of the countries in which it exports to, it
“Economic downturns in these countries could affect consumer
spending habits by decreasing the overall demand for home furniture
products,” it said in Wegmans Annual Report 2019.
“Changes in interest rates, consumer confidence, new housing starts,
existing home sales, the availability of consumer credit and broader
national or geopolitical factors have particularly significant effects
on our business.
“On top of this, the Covid-19 outbreak has evolved into a global
pandemic, adversely affecting economies worldwide due to the widespread
imposition of travel restrictions, constraints on themovement of people
and the suspension of many business operations to curb the spread of
“In addition, our group needs to adapt to the 2020 Malaysia movement
control order (MCO), while also addressing the impact of the ongoing
Covid-19 pandemic which may affect the group’s financial performance
arising from the delay in the restoration of disrupted supply chains and
shipments in respect of major raw materials and deliveries of orders.”
The extent to which the coronavirus impacts our results will depend
on future developments, which are highly uncertain and cannot be
predicted, including new information which may emerge concerning the
severity of the coronavirus and the actions to contain the coronavirus
or treat its impact, among others.
“Nevertheless, we are fully confident in what the future holds. We
will stay the course, remain steadfast in executing our efforts to
strengthen our Group’s long-term competitiveness and continuously create
value for our shareholders.”
Poh Huat explores diversification
While office furniture remained the mainstay for Poh Huat’s
Malaysian operations, the group continued to expand its range of home
bedroom furniture as more and more distributors and retailers in the US
offer panel-based bedroom sets as alternative to the higher end spray
The sales contribution from these panel-based bedroom sets continues
to increase steadily from about 26 per cent of its Malaysia’s sales in
the previous year to 34 per cent in the current year.
“We increased shipments of panel-based furniture to our American
customers and even include some internet/online retailers in India,” it
said in the Annual Report.
“In product development, we continued to collaborate with our US
customers to develop several ranges of new bedroom sites which were
featured in the High Point Furniture Fair, one of the most prominent
furniture trade shows in the US.
“Shift in demographics and the push for e-commerce have dictated new
functional and design requirements and re-formatting of the furniture
retailing, distribution and fulfilment channel.
“Over the last few years, we have worked closely with key customers
in the US to develop and launch new ranges of panel based bedroom sets
which incorporate requirements for more efficient warehousing and
distribution as well as “consumer friendliness” considerations for
ready-to-assemble products. We have also made efforts to rationalise our
products mix to accommodate for younger US consumers.”
Also, the normalisation of the activities amongst Vietnamese
furniture manufacturers following the surge of investment in new
factories has also resulted the de-escalation for demand and hence,
prices for key raw materials such as particleboards, solid timber and
“The availability and prices of these materials were lower and more
stable, allowing us to plan our sourcing visà-vis our production
schedules better,” POh Huat revaled.
“Likewise, the scramble for workers in Vietnam due to vacancies in
new factories which was apparent last year, has also similarly
normalised during the financial year.
“The labour market appears to have stabilised during the year
following market demand-supply and production adjustments amongst
manufacturers in Vietnam.”
Ensuring sustainability of wood supply
The successful transformation of Malaysia’s wood furniture industry
from a cottage industry to a billion-dollar industry currently owes much
to the survival story of the rubber tree.
The timber is a by-product used mostly by the furniture industry,
making it a sustainable alternative to tropical woods extracted from
natural forests. As the rubber trees are cultivated, the trees can be
replanted after the productive life cycle. Therefore, rubberwood is
deemed as an environmentally friendly wood given that it is harvested
from a renewable source.
“In a move to ensure adequate supply of rubberwood to the furniture
industry, the government banned the export of rubberwood in 2017,”
PublicInvest Research said.
“Rubberwood sawn timber exports to China and Vietnam was estimated
to be at RM200 million to RM300 million annually before the ban. The
shortage in rubberwood supply previously had caused the raw material
price to surge to RM2,300 per tonne from RM1,600 per tonne.
“Since the implementation of the ban, the rubberwood prices have
stabilised to RM1,600-RM1,700 levels and have provided the industry with
In order to reduce pressure on native forest as a source of raw
materials to ensure forest sustainability, Malaysian governement had
launched a Forest Plantation Programme in 2005. The program targeted to
plant 25,000 ha of forest plantations per annum in order to achieve
375,000 ha of forest plantations by 2020.
For every 25,000 ha of mature forest plantation, it is expected to
produce 5m m3 of timber. The plantation programme focuses on 2 species,
namely Rubberwood and Acacia mangium. According to MTIB, as of 2016 a
total of 114,355.43 ha have been developed under this programme.
Over the years, Malaysia has introduced several forestry programmes,
projects and activities to ensure forest resources are maintained for
Initiatives that were introduced include forest mapping using
Geographic Information System, research in forest management as well as
formulating guidelines and standards to facilitate better management and
“We believe that we are slowly seeing the results from the
initiatives introduced as rubber acreage in Malaysia has stablised at 1m
hectares for the past 10 years, which should be able to provide a
sustainable supply of rubberwood to the furniture industry.”
Covid-19’s impact to furniture manufacturers
The Covid-19 pandemic made it tough for businesses to keep their
financial wheels turning and the impact of lockdowns were particularly
brutal for companies with little reserves for managing sudden slumps.
Malaysia was not spared as the economic indicators showed a worrying
trend during the Movement Control Order (MCO) when it was first
implemented from March 18 to 31, 2020 to contain the pandemic.
According to the Malaysian Timber Council (MTC), numerous
consultation sessions among the various ministries, government agencies
and the private sectors took place throughout the MCO to discuss and
finetune the implementation of the regulations and satandard operating
procedures (SOPs) for businesses that were given approval to operate
during the MCO.
“As many industries were contemplating a shutdown, the timber sector
received special approval from the Ministry of Health through the
Ministry of Plantation Industries and Commodities (MPIC) to operate
under strict adherence to the SOPs during the MCO,” it said.
“More than 500 timber-based companies were granted approvals of
which over 70 per cent were furniture and moulding manufacturers. The
Malaysian Timber Industry Board (MTIB) helped to evaluate and approve
the companies to operate during the MCO.”
MTC, together with many public and private sector organisations,
played a key role in facilitating the smooth operation of the timber
sector by analysing and channelling feedback from the industry players
to the government through consultation sessions.
MTC had also conducted an industry-wide survey which uncovered
concerns over the slowing global and domestic demands, cashflow
management, order fulfilling issues and workforce sustenance.
Worry over raw material supply
One of the primary hiccups during the MCO involved the supply
disruption of timber raw materials which was swiftly resolved during the
CMCO when the government granted permission for the transportation of
logs from the landing sites to the respective factories. Since then
timber-based manufacturers were assured of regular supply of raw
materials for their operations.
“The timber sector has been literally up and running during the MCO
and CMCO with 90 per cent of manufacturers having resumed operations and
more than 60 per cent had begun exporting their products,” MTC added.
“These timber-based manufacturers are also revisiting their business
plans and actively relooking at digitalisation and automation options
to further fortify their operations.
“The timber sector in Malaysia has been largely operating
unhindered, thanks to the quick response and strong support from the
government which has also signalled of more assistance to stimulate the
economy to enable businesses to weather the pandemic storm.”
MTC, too, in line with its role and obligation to the timber
industry has taken the necessary steps to transform its operation model
and activities to suit the current and post-Covid-19 business needs.
“It’s a digital push we are looking at now. We simply cannot ignore
this fact and businesses must now consider operating on e-platforms,”
said MTC acting chief executive officer Wong Kah Cane, who also assured
buyers of Malaysian timber products that any order will be readily met
by local manufacturers and suppliers.
“Together with the cooperation and collaboration among various
ministries, agencies and the private sector, MTC will do its part to
ensure that the Malaysian economy and timber industry will be more