Closely Knit -- How a Dutch research experienced life in Batu Pahat

In this article we (two Dutch students whom some of you met) would like to explain to you how we ended up doing our field research in Batu Pahat and what our impression is of this textile town after living there for three months.

During our four-year study International Economy and Economic Geography in the Netherlands we learned a lot about the concept of economic clustering. But most of this was all highly abstract and theoretical. For our final project we left the Dutch cold and flew all the way to Malaysia to study a real-world example of an economic cluster. Reason to do this in Malaysia was the Second Industrial Masterplan, a government plan which charts the policies and strategies which should be pursued in order to transform the manufacturing sector into a resilient, broad-based and internationally competitive sector. One of these strategies is the cluster-based industrial development that identifies eight industry groups, which should be transformed into a competitive industry cluster. One of these eight industry groups is the textile and apparel industry group. The Malaysian government uses the following definition of an economic cluster:

An agglomeration of inter-linked or related activities comprising industries, suppliers, critical supporting business services, requisite infrastructure and institutions.

The industrial masterplan was again very theoretical, and we became very keen on finding out about cluster-based theory in the real world. Our interest became unraveling a cluster. We choose the textile and apparel industry because the University of Utrecht was already involved in a research project in this industry in Malaysia. Besides this, we were interested in this sector because it will always be there some way or another for the simple reason that 'Everybody needs clothes'.

Questions we wanted to be answered through this research were for instance: What kind of actors (companies, institutions) operate in such a cluster? Do these actors co-operate with each other? And if they do, how was this relationship established and what does this relationship mean for the operations of a company? To answers these questions we formulated a questionnaire and came to Batu Pahat to uncover the depth and extent of this cluster and the linkages that are part of it.

All we knew about Batu Pahat when we came to Malaysia was that it is widely known as the textile town of Malaysia. Some people call it a 'cowboy town', some refer to it as the 'Best Place' in the world, but the truth lies in the fact that it is home to almost half of the textile factories in the country. The large amount of textile industries makes Batu Pahat the perfect area to conduct this research.

Firstly, the MKMA gave us an insight into how Batu Pahat turned itself into a textile town. We learned that the textile industry in Batu Pahat has a long history. In the 1950s a spinning mill was situated here. This mill was the start of a concentration of textile companies in this region. A lot of new textile companies were established by former workers of this mill. Nowadays especially the knitting segment is very strong represented in this area. Besides many small and medium sized enterprises, there are also a couple of very large players situated in Batu Pahat, e.g. Ramatex and the PCCS group. These companies are mainly export oriented and have also branches overseas, but are also seen as the frontrunners in the region for other companies. The opening of the southern branch of the MKMA was another boost for the textile industry in Batu Pahat. MKMA opened up a branch here because it felt that it could cater more for the welfare of the knitting related industries such as spinning, printing, and sewing. All these activities are well represented in Batu Pahat and the MKMA felt that a geographical closeness to the companies could help these companies in their representation to the government. In other words, being near the companies was a way to decrease the psychological distance to the government in Kuala Lumpur.

Batu Pahat can be seen as a special place for the textile industry in Malaysia. From one simple spinning mill the town has grown to an area with the largest concentration of companies in Malaysia that represent textile industry. In Batu Pahat almost all the activities in the textile commodity chain are carried out. Batu Pahat is a special place because the textile industry here is very linked with each other. The informal linkages are very tight in Batu Pahat. Most of the companies exchange information with each other and say that they help each other whenever they can.

These informal linkages were very striking to us. Textile manufacturers in Batu Pahat tend to "knit closely". Instead of being organised in a formal matter through for instance an employers association, the contacts between the different companies occur mainly over dinner. Being invited to different of these lunches we could see with our own eyes how these contacts work. Events in the industry are discussed, day-to-day worries are shared, and new gossips cross the table. These informal contacts are in our opinion a good basis to share knowledge and information. We found out however that this does not occur on a large scale and could/should be improved. The owners of the different companies show reluctance when it comes to sharing knowledge. They always keep in mind that they are competitors. We think that when these entrepreneurs become less suspicious to one and another advantages can be gained for everyone. Two examples will make this clear.

Most of the companies we visited told us that they have a problem with finding skilled labour. A common reason for this is (according to them) the unattractive character of the industry. The general view of the industry is dirty, underpaid, long hours, and not glamorous at all (compared to electronics and automotives). Each of the companies tries on their own to get the right people, e.g. by importing foreign workers or shift operations to the kampong where there is still an unemployed workforce. Instead of solving the problem by them selves we think that when these companies join forces they should be able to overcome this lack of skilled labour. Training programmes could be initiated for instance on the workplace (financed by all companies), the general view of the industry could be improved by promoting it on universities and other training institutes. By solving the problem together time and money could be saved.

Another example is that companies complain about the locally produced fabrics. Local fabrics are often of a quality, which is not according the international standards. This causes problems for the garment companies as well for the fabric producers. The garment companies have to import their inputs and the local producers have to offer their products for a lower price. A solution could be a more intense co-operation between local suppliers and garment industries. With a more intense co-operation on product and process development quality could be improved and companies could get a better price for their products. The garment companies could get quality products in the vicinity instead of having to import it, which comes with uncertainties about delivery time and import regulations. In this way, local supply and local demand could become more linked in this way. Again, this would bring benefits for all participants.

Other problems the industry faces could also be solved more easily according to us when co-operation between the companies intensifies and trust increases. We see that the opportunity to co-operate is there (= informal contacts), but people do not make fully use of it. We even think that in order to survive the companies will have to co-operate more intensely in the future. Innovativeness is one of the keys to staying in business. Working together (as two people know more than one) on innovations is an opportunity to increase the competitiveness of the industry as well. Competition will increase and staying competitive will become harder and harder. Joining forces will become the way to survive!

At the moment we are working on our final report. Hopefully this will be finished at the end of July. This report will be send, of course, to the MKMA where everybody is free to take a look at it in the library.

Finally we would like to take the opportunity to thank all the companies who were willing to let us come to their factory and answer all of our questions. The interviews held have given us a lot of information about the industry to write our final report. We will remember Batu Pahat as the Best place!

(By Thomas Akveld & Pieter Liebregts, B.A. Candidates, University Utrecht, The Netherlands)

Back to Index of April 2001