Of the three category, the most critical challenge is with regard to labour and then raw materials. The third category is a longer term challenge incorporating manifold strategies.
The shortage of raw materials current affect production as well as impede long term planning. While Peninsular Malaysia has banned the export of round logs, the export of logs is still allowed in both Sabah and Sarawak. This dichotomous situation has lead to the continuous outflow of raw materials in low value added form onto the international market from these two states while timber manufacturing companies from both Peninsular Malaysia and Sabah and Sarawak are facing acute shortages of raw materials to work on. On the long term, this demotivates investment into high value downstream processing of timber and puts a stump on the growth of the timber industry.
There have been concrete moves to promote forest plantation to resolve this raw material issue. However, the risk here are high and more need to be done to attract investment into this activity. To alleviate the risk issue, grants-in-aid from the government as well as interest free loan should be made available to investors.
The research to identify other non-commercial species of timber is an on -going activity of the forest departments and the timber research fraternity. This is more a long term option.
Unless Sabah and Sarawak legislate to prohibit round log exports, the most ideal national plan document to move the industry forward will only be delusional. There need to be some form of understanding between the Federal Government and the two state governments so that a planned cutback of timber log exports can be implemented for the growth of the timber industry.
The labour issue is the most contentious. An over-reliance over labour in this industry for such a long time is proving to be a bane as locals do not want to involved themselves in this industry and when foreign labour has become a much sought commodity. Any policy measure to assist the industry from this aspect will be short term and relying on labour on the long term will be self-defeating. The way out is to go into mechanisation and automation processes.
To motivate industry players to pursue mechanisation and automation,the government must be innovative in its funding and fiscal initiatives. Suggestions like using part of the foreign worker levy to set up a trust fund to finance technology adoption, innovation and automation as well as a Commodity Bank to assist in this direction must be seriously considered by the Government.
Currently, general workers can be recruited from other source countries to work in the timber industry. Statistics from the Home Ministry has shown that lately, there are fewer foreign workers from source countries like Nepal and Vietnam. The fast growing economy of India has attracted Nepalese, Sri Lankan and Bangladesh to work in India which is closer to their countries. Similarly, the Vietnamese are staying home because of their rapid economic growth.
Even so, a good source country to consider on a longer term will still be Bangladesh. However, the government must take cognizant of the potential social problems that can be created in the recruitment of Bangladesh workers.
Marketing and Promotion is the third challenge confronting the industry. Where once industry were contented to be contract manufacturers for overseas firms, that kind of strategy will not be expedient in the long run. As skills are developed both from the shop floor and from industrial training institutes such as WISDEC, industry players must seriously think of positioning themselves as Malaysian product manufacturer in their own right. Issues like innovative designs and own brand manufacturing should be the next targets on the movement up the value chain. The time has come for more strategic marketing and promotion of Malaysian timber products.
Apart from government support to showcase our global quality products at international timber product fairs, genuine attempts at strategic marketing and promotion alliance must be forged. Here, Malaysian timber promotion agencies and associations can play their role with their international counterparts to work out a win-win platform that is sustainable. On the part of government, FTAs would be a good place to start.
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