KUALA LUMPUR (July 16): The Federation of Malaysian Fashion, Textile and Apparel (FMFTA) claimed today the industry had in 2020 incurred an estimated RM163 million loss a day as operations in Malaysia were shut due to Covid-19-driven movement restrictions to curb the pandemic, which cut the sector’s 2020 export value to about RM21 billion from RM27 billion a year earlier.

In a statement distributed to reporters covering FMFTA’s virtual press conference today, the federation said the industry is appealing to the government to move the industry to phase two of the National Recovery Plan (NRP) from phase one to enable the sector to resume operations and ensure its survival.

"The federation also reiterated that their members are not able to survive if they were to wait for the transition from Phase 1 to Phase 3 without operating given the current pandemic situation in Malaysia,” FMFTA said.

According to FMFTA’s statement, the federation was established on Oct 29, 2019 by the Ministry of International Trade and Industry with the mission to unite all associations in Malaysia’s textiles and apparel industry.

FMFTA said it has 12 association members comprising the Malaysian Textile Manufacturers Association, Malaysian Knitting Manufacturers Association, Malaysian Footwear Manufacturers Association, Persatuan Wanita Bumiputra Dalam Perniagaan Profession Malaysia (PENIAGAWATI), Malaysian Garment Marketers Association, Malaysia Textile and Apparel Center, P.W Gold and Silver Ornament Merchants Association, Malaysian Gifts & Premium Association, Persatuan Batik Malaysia, Malaysia Garments Wholesale Merchants Association, Asean Designers Guild and KL Fashion Week.

FMFTA said that based on the NRP, the fashion, textile and apparel industry is listed under phase three of the NRP.

"FMFTA expressed their deep concern as the industry cannot afford further shutdown and face an estimated RM163 million losses per day,” FMFTA said.

FMFTA claimed in the statement that four renowned foreign-owned multinational textile and apparel factories have shut down their operations in Malaysia and retrenched about 6,000 employees in 2020 as the industry contended with the impact of Malaysia’s Movement Control Order (MCO) which was first implemented in March 2020 to curb the spread of the pandemic.

Since then, many local manufacturers in the industry have shut down or downsized their operations, resulting in about 15,000 job losses in the industry, according to FMFTA, which did not specify the names of the four renowned foreign-owned multinational textile and apparel factories that had shut down their operations in Malaysia. 

FMFTA chairman Datuk Seri Tan Thian Poh said in the statement that since the first MCO, which is commonly known as MCO 1.0, 15% of fashion, textile and apparel businesses in Malaysia have ceased operations and another 30% are on the verge of ending their businesses due to lack of cash flow amid Covid-19-driven uncertainties.

He said the situation will worsen if they are not allowed to operate under phase two of the NRP. 

According to FMFTA's statement, its council members have urged the government to allow the industry to operate in phase two of the NRP as companies may not be able to continue absorbing the daily losses of about RM163 million anymore due to the prolonged shutdown.

At the virtual press conference today, Tan said the fashion, textile and apparel industry in Malaysia is one of the major contributors to the country's exports of manufactured goods, particularly to the US, Europe, Turkey and other parts of the world since the 1970s. 

For 2020, the Malaysian fashion, textile and apparel industry's export value declined to RM21 billion from RM27 billion in 2019 due to the pandemic, he said. 

“We reckon that the situation will deteriorate further and beyond salvage as some of our members are facing litigation and risk losing their overseas customers.

“These overseas customers will move their future orders to other countries due to the uncertainties if we are not allowed to operate soon,” he said.

Tan had also explained to reporters how the Malaysian fashion, textile and apparel industry's estimated RM163 million daily loss figure was derived.

According to him, the annual manufacturing sales value for the industry in 2020 amounted to about RM24.23 billion, hence the industry’s manufacturing segment's revenue loss due to the pandemic-driven shutdown was estimated at RM80.8 million per working day.

He said the industry’s retailers recorded a combined annual sales value of about RM29.6 billion in 2020, hence the loss in the industry’s retail segment revenue due to the shutdown was estimated at RM82.2 million a day.

“The manufacturers are not able to continue absorbing the huge daily losses anymore through the prolonged shutdown.

“Some retailers may choose to close their business operations due to their inability to pay rental and wages because of zero revenue caused by the business shutdown during MCO,” he said.

After taking into account the industry’s estimated RM163 million daily loss in 2020, Tan said today FMFTA believes there is a great urgency for the industry to be allowed to operate in phase two of the NRP to avoid the collapse of the industry beyond salvage.

As the industry employs about 500,000 employees across the country, a prolonged shutdown will put them at stake of losing their jobs and aggravate the unemployment rate in Malaysia, according to him.

“We foresee that more than 30% of the retailers will collapse before phase three of the NRP and 150,000 employees will be retrenched,” he said.