Latest news with #MalaysianFurnitureCouncil
The Star
10-07-2025
- Business
- The Star
Govt urged to intervene as new US tariff brings jitters for businesses
JOHOR BARU: The 25% tariff imposed by the United States on Malaysia has sent jitters through the manufacturing sector, with many warning of cancelled orders and a potential wave of business closures. The furniture industry, for one, fears losing business to Vietnam, which faces a 20% tariff, while some other industries are even thinking of relocating. Malaysian Furniture Council president Desmond Tan said Vietnam, Malaysia's closest competitor in the global furniture market, produced a similar range of products and targets the same export destinations – especially the United States. The tariff for Vietnam was reduced to 20% from the original 46%. 'Since the announcement was only made yesterday (Tuesday), it is still too early to gauge the full extent of its impact on order volumes but the council will continue to monitor developments closely,' he said. Tan said the industry was also being squeezed by rising costs on the domestic front. 'These include the expanded Sales and Service Tax (SST), which now imposes a 5% tax on raw materials and directly drives up production costs. We also face higher labour expenses with the new minimum wage,' he added. The new Employees Provident Fund contributions for foreign workers would add further strain while fuel and electricity prices had also gone up, he said. The council is now urging Putrajaya to commence urgent talks with the United States to negotiate a reduction of the tariff. He also appealed for a rethink on the new taxes and price hikes to lower production costs, and for export incentives to protect jobs. The United States accounts for 60% of the country's total furniture exports, totalling RM2.039bil in just the first four months of the year. Malaysia also exports furniture to Singapore, Australia, Japan and the United Kingdom, among others. Muar Furniture Association president Steve Ong said the new tariff was a major blow, as Muar supplied more than RM4bil worth of furniture to the United States in 2024. It made up 67% of Malaysia's total furniture exports there, he said. 'The 25% tariff will likely lead to clients cancelling orders and local manufacturers scrambling to stay afloat. This is an urgent crisis,' Ong said. Another industry player urged the government to act swiftly. 'If nothing is done, a globally competitive industry like ours could shrink or even collapse,' said Goh Song Huang. 'At a time like this, we need clear, steady policies and a government that understands and responds to the real pressures we face.' In Penang, local industries are bracing for reduced demand with some considering relocation. 'Companies in Malaysia may be forced to shift parts of their production to countries with lower tariffs,' said Malaysia Semiconductor Industry Association (MSIA) president Datuk Seri Wong Siew Hai, adding that higher prices driven by import tariffs tend to suppress global demand. 'When the cost of imported goods rises, demand naturally falls. In the end, everyone along the supply chain, especially buyers of raw materials, will be affected,' he said. Earlier, it was reported that semiconductor exports would be exempt from the tariffs but it is unclear whether exemptions will remain under the new tariff regime. 'Vietnam's tariff is at 20%, which gives them a pricing advantage. US buyers may look for cheaper alternatives, putting Malaysian exporters at a disadvantage,' he said. Federation of Malaysian Manufacturing (FMM) Penang chapter chairman Datuk Seri Lee Teong Li said the 25% tariff would significantly impact exporters to the US. 'It's a substantial amount. For local manufacturers shipping to the US, it will reduce profit margins. Costs will rise, and customers may start sourcing from other suppliers. 'Even when the 24% tariff was announced in April, it was already a heavy blow. We had hoped for a reduction, not an increase,' he said. He noted that for now, the strategy was to ship out as much as possible before the Aug 1 deadline. Meanwhile, the Associated Chinese Chambers of Commerce and Industry of Malaysia (ACCCIM) is urging the government to temporarily lower the expanded SST to 4% to ease the financial burden on businesses and preserve Malaysia's competitive edge. Its president Datuk Ng Yih Pyng said the government should reduce the expanded SST rate from the current 6%-8% for the first two years of implementation. He said businesses, already grappling with higher operational costs driven by multiple government-imposed measures, would now have to face the the tariff headwinds and global uncertainties as well.
The Star
09-07-2025
- Business
- The Star
Furniture players urge swift action as US tariff hike threatens furniture exports
PETALING JAYA: The Malaysian Furniture Council (MFC) has urged the government to immediately initiate bilateral talks with the United States to address the newly imposed 25% tariff on Malaysian furniture exports. The council also called on Putrajaya to suspend recently introduced cost-raising policies, particularly the expanded Sales and Service Tax (SST), and to implement short-term relief measures, including tax deferrals, raw material tax rebates, and export incentives. 'This is a critical moment that calls for empathy and decisive action from the government. 'Businesses are not bottomless automated teller machines to be taxed at will. The private sector is a vital pillar of the national economy and a source of livelihood for thousands,' it said in a statement on Wednesday (July 9). The US government's sudden tariff hike, the council added, is more than a mere tax increase—it represents a significant blow to Malaysia's credibility and competitiveness in its largest export market. The MFC revealed that many of its member companies are already facing order cancellations, as overseas buyers begin shifting their sourcing to other countries in response to the rising cost of Malaysian goods. The furniture industry—largely led by Malaysian-owned enterprises—is one of the nation's most successful manufacturing sectors on the global stage. It also supports a broad ecosystem encompassing timber, logistics, design, retail, and more. 'The new tariff risks triggering a collapse in orders, shrinking production capacity, widespread job losses, and a surge in business closures,' the council warned. Domestically, furniture manufacturers are contending with a host of new cost pressures, particularly the expanded SST, which now includes raw materials and has directly contributed to increased manufacturing costs. 'In the face of mounting internal and external challenges, the industry is disheartened that government actions appear to be adding to the burden rather than alleviating it,' the MFC added. Malaysia is set to face a 25% tariff from the United States beginning 1 August. This is a one-percentage-point increase from the previously imposed 24% rate, which had been paused for 90 days. Former US president Donald Trump described the new rate as 'far less' than what is needed to eliminate the country's trade deficit with Malaysia. However, Investment, Trade and Industry Minister Tengku Datuk Seri Zafrul Abdul Aziz has said there is still time to negotiate with the United States before the 25% tariff comes into effect.
The Star
13-05-2025
- Business
- The Star
Rush for furniture as tariffs loom
PETALING JAYA: American buyers of Malaysian furniture have asked that the products be sent to them before July in view of the uncertainty over US tariffs, says the Malaysian Furniture Council. 'Our customers in the United States have asked us to ship as much as possible during this 90-day suspension window – ideally before July,' said the council's deputy president, Matthew Law. 'What happens next depends on whether the US president announces new tariff policies. Only then will we know how to plan our business.' He said that although the United States imposes different tariff rates on different countries, Malaysia's main competitors are Vietnam, Cambodia and Indonesia. Margin for success: (From left) Law, Chan and Ng. Vietnam is subject to a 46% tariff, Cambodia 49% and Indonesia 32%. While the new tariffs have been temporarily suspended, all countries are currently operating under a base tariff rate of 10%. He said Malaysia's furniture exports primarily consist of wooden furniture, including items such as bedroom sets and kitchen furniture. He noted that local manufacturers face rising costs, including a 14.2% hike in electricity tariffs from July 2025, higher EPF contributions and increased foreign worker levies. He said the weak ringgit against the US dollar is also a major concern. Amid these challenges, US demand has begun to decline, signalling a market slowdown. According to the Investment, Trade and Industry Ministry (Miti) report card on the first quarter of 2025, Malaysia faces a 24% US tariff, well below Vietnam, Cambodia and Indonesia. It said Malaysia's furniture industry stands to gain from shifting US trade patterns, with lower tariffs making its products more appealing to American importers. Though Malaysia held only a 2.4% share of the US furniture market in 2024, its favourable tariff position offers strategic potential. Deputy Plantation and Commodities Minister Chan Foong Hin said the ministry remains cautiously optimistic as US negotiations continue, and is actively supporting talks by providing data and insights to Miti. 'At the same time, we are intensifying efforts to strengthen trade relationships with emerging markets and diversify our export destinations,' he told The Star. In the furniture sector, Chan stressed that the government will tighten enforcement to prevent Malaysia from being used as a transhipment hub for timber and timber products originating from countries hit with higher US tariffs. Among the steps being taken are stricter documentation processes, especially for the issuance of Certificates of Origin (COO). 'Both preferential COO issued by Miti and non-preferential COO issued by chambers and associations authorised by Miti play a critical role in verifying the origin of Malaysian exports and upholding the integrity of our trade practices,' he said. Samenta president Datuk William Ng said the higher tariffs on furniture imports from Vietnam, Cambodia and Indonesia have opened up a 'real and timely opportunity' for Malaysian SMEs to grow their presence in one of the world's largest furniture markets. 'Even a small shift in sourcing preference can translate into significant export gains for Malaysian SMEs. To fully leverage this, we need better marketing support, faster access to trade finance and streamlined logistics to meet increased demand,' he said. Despite the improved competitive position, Ng pointed out that local furniture manufacturers continue to grapple with rising operational costs, including labour, raw materials and energy. 'To overcome this and still grow our production and exports, we encourage SMEs to adopt automation and smart manufacturing to offset rising labour costs and improve output quality and consistency,' he added. He also stressed the need to strengthen upstream integration within the industry, noting that Malaysia still imports significant timber and related inputs. 'By nurturing a stronger local supply chain, including engineered wood and sustainable forestry, we can reduce dependency on volatile global raw material prices,' he said. Ng warned that despite the current opportunity, industry players should proceed with caution due to the unpredictable nature of US trade policy.
