The Government has set an annual growth target of 6.4 per cent for timber exports, which are estimated to be worth RM53 billion by 2020. In 2017, Malaysia exported RM23.2 billion worth of wood and wood products, primarily consisting of furniture and panel products, such as medium-density fibreboard (MDF) and plywood. Although automation and Industry 4.0 in this sector has been slow to take off, Malaysian manufacturers have started to raise capital expenditures for technological investments.
The wood & wood products and furniture & fixtures industry is transitioning up the value chain, from mostly concentrating on primary processing activities and the production of generic products. Local companies are now differentiating themselves, by becoming Original Design Manufacturers (ODMs) and Original Brand Manufacturers (OBMs), producing high value-added furniture with creative and unique design aesthetics. This enables Malaysian companies to keep rising to the challenge of stiff global competition.
As the world demand for sustainable and eco-friendly products increases, the furniture industry will be focussed on investments in R&D, and the innovation of new products, catering to this fast-growing consumer market in green and environmentally friendly products, especially in European and other First World nations.
The Malaysian furniture industry has considerable advantages when it comes to product creativity and design. From regular furniture to designer items, the variety that Malaysian furniture designers come up with appeals to even the most adept and experienced of collectors and theme decorators.
A potential area of innovation would be the establishment of a centralised furniture hub, where all industry-related activities, including designing and training, are housed at one location for the benefit of all industry players. Incentive could also be granted to companies adopting new technology such as automation and modernisation, in preparation for Industry 4.0. These efforts aim to accelerate the achievement of the National Timber Industry Policy (NATIP) by 2020.
Potential investors into this industry may take advantage of the Automation Capital Allowance (ACA) incentive. MIDA had carried out several awareness programmes on the ACA incentive in Batu Pahat and Muar in 2017, both of which had accounted for the production of more than 70 per cent of Malaysia’s furniture exports.