Newsletter: October 2010

MITI Report 2009 on Performance of the

MALAYSIAN TEXTILES AND APPAREL INDUSTRY

The performance of the textiles and apparel industry in Malaysia was affected by global economic crisis. The overall decline in productions, sales and exports were mainly due to the decrease in consumption in major export destinations such the USA, EU and Japan. The industry is expected to recover in 2010 in line with the overall increases in the confidence of retailer to replenish their stock in anticipation of increased consumption due to the economic recovery.

Production

The textiles and apparel industry recorded negative growth in production in 2009. The textiles segment recorded a greater decline (-22.6%), compare with the apparel segment (-18%). The major decline was in the manufacture of knitted and crocheted fabrics and articles which had decreased by 29%.

The factors which had contributed to the overall decrease in production were:

·        Weaker consumer spending in the USA, Japan and Europe; and

·        Increased global competitions from countries like China, India, Bangladesh, Cambodia, Indonesia and Vietnam. 

Production Index of the Textiles and Apparel Industry (2005=100)

Source: Department of Statistic, Malaysia

Sales

Sales of the textiles and apparel industry amounted RM7 billion in 2009, compared with RM7.6 billion in 2008. The reduction in overall sales was mainly due to decrease in orders and cancellations during second half of 2008 to early of 2009. 

Sales of Textiles and Apparel Products

Source: Department of Statistic, Malaysia  

Employment

Employment in the textiles and apparel industry declined by 10.7% to 47,390 workers in 2009 from 53,071 workers in 2008 due to declining orders. Skilled workers nevertheless were retained to maintain the quality of products as many of the manufacturers were supplying OEM high-end products. 

The cost of labour in Malaysia is much higher than its regional competitors such as Vietnam, Indonesia and China which had resulted in higher price for the country’s products.

Employment in the Textiles and Apparel Industry

Source: Department of Statistic, Malaysia  

Exports

Total exports of textiles and apparel in 2009 were valued at RM8.9 billion, compare with RM10.5 in the previous year. A total of RM5.1 billion or 56.8% of Malaysia’s exports in 2009 were textiles. The top three export items of textiles and apparel were textiles yarns (RM2.5 billion), woven and other textiles apparel (RM1.3 billion) and men’s apparel, not knitted/crocheted (RM643.5 million).  

The USA was the largest export market for textiles and apparel in 2009, with exports amounting to RM1.8 billion and accounting for 20% of Malaysia’s total exports for textiles and apparel.  The second largest market was Japan (RM720.1 million), followed by Singapore (RM486.4 million), Mexico (RM460.4 million) and China (RM408.4 million).  

Quotas imposed on exports of textiles and apparel products from China to the USA was lifted in the beginning of 2009 as one of the conditions for China entry into the World Trade Organization (WTO). The lifting of the quota enabled China to increase its market share, thus affecting Malaysia’s exports to the USA.  

Exports of Textiles and Apparel Products

Prepared by MITI

 Major Export Countries

Prepared by MITI

Imports

Imports of textiles and apparel decreased by 18.3% to RM4.5 billion in 2009 from RM5.5 billion in 2008. The reduction was due to the decline in consumption, especially for expensive foreign items.

Major sources of imports for textiles and apparel products were China of RM1.6 billion or 35.6% of total imports. Taiwan was next with RM427.8 million followed by Thailand (RM378.3 million), Indonesia (RM314.3 million) and Japan (RM288.2 million).  

Imports of Textiles and Apparel Products

Prepared by MITI 

Salient Development in the Industry

The 2009 Budget had exempted the employers from paying the human resource development levy for six months effective from 1 February 2009 to 1 July 2009. A total of 329 employers in the textiles and apparel sector enjoyed the exemption amounting to RM2.7 million. The exemption was given due to the declining demand and sales of textiles and apparel products which had affected the competitiveness of the industry. The government further announced a reduction in the 1% levy to 0.5% for the period of two years effective 1 April 2009.

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