Challenges Impeding Competitiveness of the Wooden Furniture Manufacturing Industry: The Case of Furniture Industry in Sarawak, Malaysia
Australian Journal of Basic and Applied Sciences, 5(9): 1135-1145, 2011
11 Pages Posted: 24 Jul 2013
Date Written: December 30, 2010
Sarawak, being the largest state in Malaysia, is a major producer of tropical timber and timber products in the world. However, despite being blessed with abundant timber resources, it has a relatively small wooden furniture manufacturing industry, with insignificant exports compared with other timber-exporting countries. The present study sets up to identify the possible impediments to the growth of the furniture industry. Qualitative data was collected from different stakeholders of the furniture manufacturing industry via unstructured in-depth interviews. Using Porter’s Diamond of National Advantage framework, different problems and challenges posed by factor conditions, related and supporting industries, demand conditions, firm strategy and government were analyzed. Factor conditions concern the supply and productivity of factors of production. Sarawak furniture manufacturers face a shortage of timber supplies, higher transportation and utility costs, shortage of skilled manpower and difficulty in securing financing for business expansion. These have undermined the competitiveness of the manufacturers, relative to their counterparts in Peninsular Malaysia. Supporting industries are underdeveloped, resulting in poor supply chain integration. Most upstream timber producers are geared towards the export markets while furniture component parts have to be imported. The domestic furniture market is small and thus could not sustain the industry on a large scale. Consequently, furniture manufacturers lack sufficient capital and scale economies to adopt new manufacturing technologies. The problems faced by furniture manufacturers are further compounded by rigid government policies and cumbersome bureaucratic processes, many of which have disadvantaged small furniture manufacturers. Anti-tropical timber campaigns in importing countries pose a further threat to the export viability of Sarawak wooden furniture. The paper ends with a discussion of the role that the state government can play in facilitating the growth of the industry. It distinguishes between the neoliberal and structuralist perspectives of government intervention, highlighting the absence of studies on the development of tertiary wood-processing industries in the state.
Keywords: Malaysia wooden furniture industry, Competitive advantage, timber
JEL Classification: L16
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