Malaysia’s textile and garment industry faces soaring costs and shortage of funds
Chan Guanzhi, president of the Malaysian Knitting Manufacturers Association (MKMA), said that due to the impact of factors such as shortages of raw materials, rising sea freight, and the weak ringgit exchange rate, raw material prices increased during the epidemic. As a result, Malaysian textile and garment industries are facing soaring costs, shortages of funds, and even losses.
Since most of the main raw materials for Malaysia’s textile and garment industry must be imported from abroad, the price of cotton has increased the most. In 2020, 1 pound of cotton was US$70, and currently it is 1 At US$140 per pound, the price has doubled, and continues to rise, causing manufacturers to continue to be in an unfavorable situation of compressing profits. Prices of textiles and garments in Malaysia are expected to rise by 30-40% in the face of sharp increases in various costs.
Due to the different epidemic situations in various countries around the world, there are problems in the coordination of the global industrial chain and supply chain. Current production and supply still cannot return to pre-epidemic levels. Global shipping rates have also continued to rise, currently rising by 10-20%. It is expected that it will be difficult to return to pre-epidemic levels in the short term. Manufacturers are facing shortages of raw materials and supply chain problems, resulting in production lines being unable to produce and deliver goods as scheduled.
Because foreign workers were unable to enter Malaysia during the epidemic, resulting in labor shortages, manufacturers had to make employees work overtime in order to ship goods as scheduled, but the costs also increased. In May, Minimum wage regulations need to be raised, which will increase manufacturers’ operating costs. In addition, Malaysia will impose a surcharge on industrial and commercial electricity in February 2022. This adjustment will also increase the operating costs of manufacturers. The increase in upstream costs will eventually be transferred to the downstream and then passed on to consumers. The price of textiles and garments in the market will inevitably rise.
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