Malaysian furniture makers to benefit from TPPA

Future fair: (From left) Tan, Gandhi and Goi show the future plan for a bigger-scale MIFF in 2018 during the MIFF 2016 pre-show press conference in Kuala Lumpur.

Malaysia will stand to benefit from the Trans-Pacific Partnership Agreement (TPPA), as there would be fewer barriers for the export of Malaysian-made furniture to the United States, said United Business Media (M) Sdn Bhd (UBM) managing director M Gandhi.

“The good thing about the TPPA is that it is not in conflict with the other free trade agreements (FTAs).

“It is an addition to what we already have.

“One of the biggest buyers of Malaysian furniture is the US, and it is part of the TPPA.

“In fact, most furniture exports are to countries that are a part of the TPPA

“Besides that, one of our competitors is China, and China is not part of the TPPA. So, Malaysia will be more competitive in exporting to the TPPA countries,” added Gandhi.

The upcoming Malaysian International Furniture Fair (MIFF) 2016, which is the largest trade exhibition of its kind in South-East Asia, is expected to generate export sales of an estimated US$900mil.

MIFF chairman Datuk Dr Tan Chin Huat is targeting a 5% growth in sales for MIFF 2016.

In addition, the ringgit depreciation has benefitted the manufacturing industry. This is because as an exporter, the bulk of the materials used to manufacture furniture is sourced locally. Only some accessories, components and machinery are imported.

Overall, the locally-sourced content of Malaysian-manufactured furniture is very high, which means that the manufacturing cost is denominated in ringgit, while the revenue is in US dollars.

“The value of Malaysian-manufactured furniture has increased by 15.8%, and part of it has been contributed by the exchange gain.

“This is the time for Malaysia to take advantage of the situation to get market share and attract more first-time buyers.

“However, the marketing, branding and positioning of Malaysia’s image as a furniture manufacturer of excellent quality has to be improved,” said Gandhi.

The majority of the people who visit MIFF are boutique buyers, who own small to mid-scale furniture outlets. These boutique buyers are searching for furniture with unique designs.

Malaysian furniture manufacturers’ strength lies in their ability to cater to their buyers’ needs.

Not only are they able to deliver unique products, but they are also adaptable to requirements of a specific city or country.

“Malaysia has also adopted duty-free import and export of furniture, and this is an advantage over neighbouring countries where they have very high tariffs.

“This is a good opportunity for Malaysia to meet its target of becoming one of the largest furniture export centres,” he said.

However, Tan added that there was room for improvement when it comes to being environmentally conscious.

In order to attract more high-value buyers, who are concerned about the environment, Malaysian furniture manufacturers have to take measures to ensure that both the products and manufacturing process are environmentally friendly.

In a series of pilot programmes under the UBM-Alibaba.com collaboration, MIFF 2016 will be the first UBM trade event in which the Alibaba.com Trade Assurance Programme will be introduced, and a total of 100 Malaysian manufacturers have been selected to participate in the three-month free trial.

The free trial will run from March 2016 until May 2016.

“I think this is the first time we are introducing a pilot programme to test how Malaysian exporters can go beyond trade exhibitions.

“This programme will enable suppliers and buyers to develop the business relationship and credit terms as well as attract new buyers.

“The collaboration between UBM and Alibaba entails the development of an app to enhance business-to-business transactions,” said Gandhi.

Initially, the Trade Assurance Programme was exclusively available to China businesses. This is the first time that the programme will be extended to Malaysian manufacturers.

Under the programme, Alibaba will guarantee the quality of the products and delivery time. Should products be of sub-par quality or shipment arrival overdue, Alibaba will compensate the purchaser.

This would be especially helpful for first-time buyers and to introduce more buyers to the Malaysian furniture market.

Besides that, the programme will encourage more exports from Malaysia and make it easy for people to buy from Malaysia.

The amount of assurance that will be given is a one-time delivery and payment between US$40,000 and US$100,000, depending on the company’s size and other matters.

MIFF 2016 will see participation from 500 exhibitors from 140 countries, some of which are from China, Taiwan, South Korea and Indonesia.

“For the first time, the upcoming fair will include six Japanese companies that will be featuring their products.

“This will also be the first time that Japanese companies are participating in an international trade fair,” said UBM and MIFF general manager Karen Goi.

MIFF is the oldest international trade fair in Asia, with the upcoming MIFF 2016 event being the 22nd edition since its debut in 1995.





source: theStar