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Malaysia Wood-based Industry

 


The wood-based industry in Malaysia comprises four major sub-sectors:-

  • sawn timber
  • veneer and panel products which include plywood and other reconstituted panel products such as particleboard/chipboard/fibreboard.
  • mouldings and builders joinery and carpentry (BJC) such as doors/windows and its components, panels and flooring board/parquet.
  • furniture and furniture components

The industry is predominantly owned by Malaysian and it is estimated that 80% of timber-based companies are small and medium size companies.

Most of the larger sawmills, veneer and plywood mills are located in Sabah and Sarawak. Mills in Sabah and Sarawak utilise tropical wood species for the production of sawn timber, veneer, plywood and other veneered panel products. More than 45 per cent of the plywood mills and 60 per cent of the mouldings mills are located in Sabah and Sarawak.

The downstream processing mills for the production of fibreboard, BJC as well as furniture and furniture components are mainly located in Peninsular Malaysia. These mills mainly utilise rubberwood which are sourced from sustainable plantations.

Malaysian furniture manufacturers produce a wide range of furniture from office, kitchen, bedroom, dining room, occasional, living room, upholstered furniture/sofa, outdoor and garden furniture.

Furniture is made from not only wood, but also all types of materials such as rattan, metal, fabrics, plastic, glass, marble and other composite materials.The furniture manufacturers are located mainly in Johor, Selangor, Sarawak, Perak and Melaka.

Sectoral Performance


Sawn timber

An established industry with 822 sawmills in operations (Peninsular Malaysia (455), Sabah (174) and Sarawak (193). Export of sawn timber in 2007 amounted to RM2.9 billion mainly to Thailand, the Netherlands, Japan, People's Republic of China and South Africa.

Panel Products

Plywood

In the panel products sub-sector, plywood remains a significant contributor (27%) to the total export earnings of timber products. The range of plywood produced includes common veneer-faced plywood, overlaid plywood such as printed paper and polyester plywood, plywood for concrete formwork and marine plywood. Malaysian plywood has achieved international standards such as Japan Agricultural Standards (JAS), British Standards ( BS) and International Hardwood Products Association Standards (IHPA) for the US market and Harmonised European Standards (EN) for Europe market. Malaysia currently is the largest exporters of tropical plywood in the world.

Particleboard

In view of the need to maximise the utilisation of wood resources, the industry has diversified into the production of high value-added reconstituted panel products such as particleboard and medium density fibreboard. The particleboard industry has grown and currently there are 16 companies in operation. The industry, over the years has successfully exported its products particularly for use in the furniture industry. In 2007, exports amounted to RM371 million with Indonesia, People's Republic of China, Rep. of Korea and Vietnam as the main markets.

Medium Density Fibreboard (MDF)

The MDF industry currently has 14 companies in operation with nine (9) located in Peninsular Malaysia, three (3) in Sarawak and two (2)in Sabah . Exports for 2007 totalled RM1.18 billion representing 5 per cent of total timber export earnings. Currently, Malaysia is the world's third largest exporter of MDF mainly to AE, Japan,Viet Nam , People's Rep. of China, and Indonesia. Malaysian MDF has attained international standards such as BS, Asia-Pacific: Japan Australia and New Zealand (JANS), and EN standards. A number of companies have also ventured into the production of laminated / printed MDF.

Veneered Panels Products

Besides MDF, the industry has continued to develop engineered products from veneer such as laminated veneer lumber (LVL), laminated veneer cross-band (LVB) and laminated veneer sandwich (LVS) to meet the demand for structural and industrial applications. The industry combines modern technology with the efficient use of natural resources to produce these products for the export market.Besides being environmentally friendly, these products, with enhanced structural quality to meet different climatic conditions, are increasingly being used in the construction industry.

Mouldings and BJC

The products under BJC include architectural mouldings (panelling, skirting, crowns, and chair rails), doors/windows and accessories, wooden flooring and wooden railings. Exports of mouldings and BJC are mostly to the USA, UK, Australia, Singapore and Denmark. In 2007, exports of mouldings were RM852 million while BJC registered RM1.88 billion. The major products under this category were wooden floorings and wooden doors, and together they contributed two third of exports of BJC.

Furniture and Fixtures

In 2007, wooden furniture sub-sector placed second after plywood in terms of contribution in the wood-based industry (accounting for 27.5 per cent of total export earnings for the wood sector. During this period, Malaysia exported RM6.4 billion of wooden furniture mainly to the USA, UK, Belgium, Germany and Denmark (total export of furniture in 2006 was RM6.2 billion). Malaysian furniture industry is highly export-oriented with over 90% of its production exported. Malaysia ranks as the 9th largest exporter of furniture and second in Asia after People's Republic of China, with exports to more than 160 countries. The export value of furniture is expected to reach RM10 billion by 2010.

Among the furniture exported are kitchen furniture, bedroom furniture, upholstered with wooden frame and office furniture of which over 80 per cent are made from rubber wood, a light coloured, medium hardwood popularly called Malaysian oak' . The export of garden/outdoor furniture from tropical hardwood is mainly for the European market . The solid tropical wood species used are known for their durability under different climatic conditions. Besides these traditional markets, Malaysian furniture has gained access to the markets in New Zealand, South America, Middle East, Africa and Russia. Malaysia is a major supplier of office furniture to the Middle East market.

Malaysian furniture companies numbering about 2,300 are mainly located in Peninsular Malaysia. A high concentration of furniture establishments are in Johor (Muar and Kluang), Selangor (Klang and Sungai Buloh) and Melaka (Bukit Rambai).

With the challenges from globalisation and liberalisation, Malaysian furniture manufacturers have given greater emphasis on the finishing, design and production of higher quality products with own-brand mostly for the export market. Some of these companies have moved from supplying ready-to-assemble furniture towards manufacturing own-designed furniture.Recognizing the need to move from designing manually to the use of Computer Aided Design (CAD), AutoCAD is one of the popular software system used by Malaysian furniture manufacturers today. In order to produce designs which are both functional and aesthetic, Malaysian furniture companies have ventured to utilise a wide range of other materials such as metal, glass, plastic and other composite materials in combination with rubber wood or other wood species for the increasingly sophisticated market.

There are over 1.6 million hectares of rubberwood (Malaysian Oak) plantations in the country with an estimated 2 million m 3 of wood annually for consumption mainly from Peninsular Malaysia. In 2005, the production of rubberwood sawntimber in Peninsular Malaysia increased to 251,790 cubic metres from 49,929 cubic metres in 1995. However, in 2006, the production declined to 63,743 cubic meters due to the shortage of supply of rubber trees for harvesting and limited areas for replanting activity. To ensure adequate supply of rubberwood, the export of rubberwood sawntimber was banned effective 8 June 2005.In addition to rubberwood, Malaysian furniture makers are also using local (Balau, Kembang Semangkuk and Nyatoh) and imported timbers (Oak, Maple, Walnut, Mahogany, Rosewood and Teak) to offer a wider selection of products.

Investment Opportunities in the Wood-based Industry


Malaysia focus in the development of the wood-based industry is in value added downstream products.This should be further supported through the development of the industry in an integrated manner, combining both manufacturing activities and research and development including product design and market promotion. This is important in the development of the wood-based industry as increasing competition from low-cost and resource-rich countries would inevitably force Malaysia out of the low-end markets.

The wood-based industry is one of the resource-based industries with potential for growth. In order to maximise the utilisation of wood resources, the industry has moved into the production of engineered wood products.Products are now being manufactured from trees of smaller diameter/lower quality. It is environmentally friendly, easy to use and strong. These products have set new performance standards by minimising both resources and manufacturing defects while enhancing structural features.

Engineered wood products can be divided into two categories i.e. structural and non-structural wood products.Structural products include structural plywood, Oriented Strand Board (OSB), structural composite materials, Glued Laminated Timber (Glulam), Laminated Veneer Lumber (LVL), Strand Lumber (parallel or oriented).Non-structural engineered woods are particleboard and medium density board (MDF). Currently Malaysia wood manufacturers produce structural plywood, LVL, particleboard and MDF.Efforts should be made in venturing into the production of OSB and glulam, which are gaining popularity in the export markets.

In the light of diminishing wood supply, the reconstituted panel products industry has also diversified into the manufacture of high value-added reconstituted composite products such as fibre-reinforced polymer composites (FRPC). Among the sources of fibres that can be used are palm fibre, kenaf, rice husk, wood fibres (saw dust) and other agricultural waste fibres. The products can be in the form of board/profile, and suitable for use in industrial, construction, automotive and furniture industries.

Besides engineered wood, products encouraged for development with incentives along the Western Corridor of Peninsular Malaysia include:-

  • The manufacture of solid wooden doors and other specialised function doors, solid wooden windows and multi-ply parquet.
    The development of reconstituted wood-based panel products, such as MDF profiles, door skins, cabinets for audio visual equipment etc.
    Furniture and parts
  • In the case of the Eastern Corridor of Peninsular Malaysia, Sabah and Sarawak, downstream wood-based industry is still relatively undeveloped. All wood-based products except woodchip, sawn timber, veneer and plain plywood, are still being actively promoted and are eligible for the consideration of tax incentives.
    The cultivation of timber, cane and rattan is promoted as a strategic industry

There is vast potential for the development of products utilising non-wood fibres such as palm biomass and kenaf fibres to substitute wood.

 

Last Updated : Thu, 31 July 2008

Source: MIDA (http://www.mida.gov.my/)