PETALING JAYA: Many furniture making companies are likely to go under if the work stoppage continues for much longer.
The industry has already lost RM1.6 billion since the enhanced movement control order (EMCO) was imposed and their factories barred from operating from June 1.
To illustrate the extent of the damage individual companies are suffering, the Malaysian Furniture Council cited the case of a manufacturer that has already had RM2 million worth of orders cancelled since last month.
A spokesman for the council estimated that the industry could lose up to RM1 billion a month if the situation does not improve. “The losses will accumulate as long as the lockdown is prolonged,” he told theSun.
An industry source pointed out that not only the manufacturers themselves, but also other businesses along the supply chain will be affected.
“We use metal parts and glass accessories in the furniture we make, and special packaging is needed when the furniture is being transported to the buyer,” he said.
“If we cannot operate, we cannot place orders for these items. As a result, our suppliers will also be affected,” he added. Many of the suppliers are small and medium-sized enterprises (SME) which collectively account for more than 90% of the national gross domestic product (GDP).
The source said that as a result of the lockdown, the manufacturers have been facing several problems, one of which is the inability to fulfil orders.
“Some of us have already received threats from buyers that they will cancel orders and look to other countries for furniture if we fail to meet our end of the bargain,” he said.
However, he said, furniture makers have no choice but to abide by the government’s order for non-essential services to temporarily stop operations.
The source said manufacturers have already pleaded with the government to give them room to meet the demand from foreign buyers.
“We are prepared to appoint doctors to monitor our workers. We will live with stricter standard operating procedures (SOP) as long as we can get back to work,” he said.
The only positive development so far is that manufacturers are now allowed to deliver products that have already been completed and ready to ship.
The source pointed out that the furniture sector is also a major contributor to the country’s economy, accounting for RM12 billion of last year’s GDP.
“If we don’t do anything soon, our buyers will turn to Vietnam and Indonesia where the factories are still allowed to operate,” he said.
“Once we lose these customers, it will be next to impossible to win them back,” he added.
The source said that lately, many orders for low to medium-range furniture have been received from the United States. “However, we do not know how many shipments we can deliver because of the lockdown,” he said.
There are also orders for medium to high-end furniture from Europe and for high-end ones from the Middle East.
There are about 3,500 furniture manufacturers in Malaysia, and 85% of them are SME. A prolonged EMCO is likely to force them to close down, the source said.
He said Johor alone accounts for 80% of all furniture exports.
“Malaysia is among the top 10 furniture manufacturers in the world, and a prolonged shutdown will hurt the industry badly,” the source said.
“We are very worried because once we lose our customers it will be very difficult for us to get new customers and gain their confidence.”
Source: https://www.thesundaily.my/home/many-may-have-to-close-shop-if-lockdown-is-prolonged-ME8060835