02 Dec 2010

Textile industry in labour pains

Malaysia Textile News, Textile News Comments Off

MTMA: Foreign workforce key to more exports

GEORGE TOWN: The Government needs to relax its control on the supply of foreign labour to enable the local apparel and textile industry tap the US market when the Trans-Pacific Strategic Economic Partnership (TPP) agreement comes into effect in 2012.

Malaysian Textile Manufacturers Association (MTMA) vice-president Datuk Y.H. Tan said the United States was a key market that absorbed between 35% and 40% of the RM8.9bil worth of apparel and textile products exported from Malaysia in 2009.

Presently our cotton and synthetic man-made fibre products are entering the US market with a 17% and 30% duty respectively. The Malaysian authorities are now negotiating for the duties to be lowered to zero or to a minimum level, he told StarBiz.

The negotiations on the duties are expected to conclude in 2012, which will see also the implementation of the TPP. Once the duties are removed, we will be able to increase exports to not only just the US, but also the other TPP countries.

But Tan said with the foreign labour shortage problem facing the industry, the implementation of the TPP agreement would make little difference.

The TPP countries comprise Brunei, Chile, New Zealand, Singapore, Australia, Malaysia, Peru, the United States and Vietnam.

The foreign labour constraint was still a key issue curtailing exports this year, Tan said.

Due to the shortage of foreign workers, our members do not dare to accept additional orders this year. Thus the annual exports this year will remain around RM8.9bil, more or less the same as last year.

For the first nine months of 2010, the value of textile and apparel exports from Malaysia was RM6.5bil, he said.

In 2008, the exports of textile and garment products were worth approximately RM10.5bil, he added.

Last year, the shortage of foreign labour was one of the reasons that caused exports of textile and apparel products to the United States to drop to about RM1.8bil, compared with about RM2.4bil in 2008.

From January to July this year, the total value of textile and apparel products exported to the United States was about RM991mil.

Tan said many customers in the United States and Europe that used to outsource from China were now looking to get supplies from the Asean region.

The cost competitiveness of China as a textile and garment manufacturing nation is eroding, as wages are rising, especially in the coastal cities.

Malaysia, known for its reputable textile and garment manufacturers, is in a very good position to attract orders from the United States and Europe.

But without easy access to foreign labour, our members are reluctant to fill their order books, lest they could not deliver on time, Tan said, adding that the Malaysian authorities were now negotiating for the yarn-forward rule to be relaxed in the TPP agreement.

The rule requires that the yarn used for manufacturing garment products for TPP countries must originate from one of the TPP countries. We are requesting that should the yarn required is not available in TPP countries, we should be able to source it from non-TPP countries, Tan said.

The MTMA has 180 members, employing some 70,000 workers, of which about 40% comprises foreign workers, compared with over 100,000 in the mid-1980s.

Source: The Star Online, Business News ( 02 December 2010)

http://biz.thestar.com.my/news/story.asp?file=/2010/12/2/business/7539718&sec=business

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