This article first appeared in The Edge Financial Daily on July 18, 2019

KUALA LUMPUR: Malaysia’s furniture exports to the US is expected to grow at least 20% annually during the next three years, supported by higher sales of completed products amid the US-China trade war.

Malaysian Furniture Council (MFC) president Chua Chun Chai said that due to the trade tension, local furniture manufacturers exported less components to China as Malaysian exports of completed furniture to the US increased.

“This may be the result of import diversion among American buyers, who may be shifting their orders to countries in Southeast Asia, including Malaysia,” he said.

Chua, who is also Export Furniture Exhibition chairman, was speaking at a press conference about the positive impact of the US-China trade war on Malaysian furniture exporters. The conference was organised by the Malaysia External Trade Development Corp (Matrade).

According to data released by Matrade, the country’s furniture exports increased 9.6% to RM4.14 billion in the first five months of 2019 versus RM3.77 billion a year earlier. Exports to the US during the period rose 20.8% to RM1.55 billion from RM1.29 billion.

The major export destinations for Malaysia are the US (37.6%), Japan (7.8%), Singapore (7.6%), Australia (5.6%) and the UK (5.6%).

Chua said other export markets for the industry that recorded substantial growth were Canada, the Philippines, the Middle East and Latin America.

This year, Chua said the MFC is “conservatively” expecting an 8% increase in furniture export sales to RM10.6 billion, from RM9.83 billion last year, on continuous higher demand from the US and other countries as China sales are seen to be on a decline.

Chua views the US-China trade war as a “golden opportunity” to grow the furniture industry.

“With this, we are also hoping that we can achieve RM12 billion furniture export sales in 2021,” said Chua, adding that the approved entry of 20,000 foreign workers for the furniture industry by the government recently will help the industry achieve its target of RM12 billion in 2021.

“There is a lot of capacity in Malaysia which is not used. A lot of factories in Malaysia have big capacities, but there are no workers,” said Chua.

Matrade chief executive officer Datuk Wan Latiff Wan Musa said Malaysia has a strong pool of exporters in the furniture industry with a niche in manufacturing.

He, however, noted the need for these players to explore the possibilities of transitioning from original equipment manufacturing to original design manufacturing or original brand manufacturing.

“This is important as the development of more local brand names is key to enhancing Malaysia’s country branding and further promotes our country as a hub for this region.”