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NEWS UPDATES 26 April 2010

Malaysia’s timber exports to rise on better economy

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Malaysia’s timber and its related products export is expected to increase 5 percent to 10 percent this year from 19.5 billion ringgit (1$=3.4 ringgit) last year, supported by better business landscape following the recovery in the global economy, local business daily the StarBiz reported.

Timber Exporters’ Association of Malaysia (TEAM) president George Tan said the worst scenario for timber was expected to be over now after the industry was affected by the recent financial crisis.

“The Middle East and India provide plenty of opportunities but we still have to focus on traditional markets like Europe, the United States and Japan,” he told StarBiz in an interview.

However, he said there were many issues needed to be resolved in the timber industry to ensure its continued growth. TEAM was inaugurated in 1955, as the Federation of Malaya Timber Exporters’ Association. Its members are mostly small and medium-scale enterprises with interests in all timber or timber products, including in the form of roughsawn, sleepers, mouldings, logs, plywood, veneer and other machined products.

Tan pointed out that it was difficult for timber companies to obtain banking facilities especially from foreign banks as some banks perceived the industry as a sunset industry.

“We want bankers to realise that timber is not a sunset industry and there is good potential as local timbers are sustainable and sourced from legally designated forests,” he said.

“Some of the timber companies face problems when comes to collateral, director’s guarantee and the interest rates imposed by the banks,” he said, adding that certain banks perceived the timber industry as being non-environmental friendly.

He urged the banks to thoroughly look into the fundamentals of these companies’ before making decision.

“We are loosing out to Singapore in term of providing banking facilities to the industry as the latter is more willing to take up financial risks and aggressive in proving such facilities,” he added.

According to Tan, labour issue is also affecting the timber industry, especially the furniture companies.

“Many furniture companies had to retrench their workforce during the economic downturn,” he said.

However, as the global economy started to recover in end-2009, it was hard to get foreign workers now.

“Should the labour shortage in the industry continue for a long period, some of these companies may have to consider relocating their businesses to Vietnam or China,” he said.

He said locals were not interested to work in the industry as they perceived it as dirty, dangerous and demeaning job.

“We hope that the ministry can speed up the process for labour approvals as this is important to ensure the companies can meet up with the increasing orders,” he said.

On the shipping cost, Tan pointed out that the drastic increased in freight rate had affected local companies.

“The freight rate from Port Klang to Europe has gone up sharply from US$600 per 40-footer container in June last year to $3,200 in March this year,” he said, adding that the association hoped the Transport Ministry could to assist in stabilising the rates.


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