MALAYSIA’S $61BN STIMULUS PACKAGE TO LIFT
TIMBER INDUSTRY DURING COVID-19

Andrew Kong, MTC corporate communications manager (left) and Francis Raj, general manager of BKB Hevea, one of  Malaysia’s largest timber manufacturers, inspect NSW blackbutt flooring.

THE COVID-19 pandemic brought much of the world economies to a grinding halt. It was tough for businesses to keep their financial wheels turning and the impact of lockdowns were particularly brutal for companies with little reserves for managing sudden slumps.

Malaysia was not spared as the economic indicators showed a worrying trend during the Movement Control Order (MCO) when it was first implemented March 18-31 to contain the pandemic.

As many companies faced mounting challenges to survive as supply and demand for both overseas and domestic markets were disrupted, the government of Malaysia had promptly rolled out a ‘Prihatin Stimulus Package’ of more than $US61 billion to weather the financial crisis brought on by the pandemic.

Numerous consultation sessions among the various ministries, government agencies and the private sectors took place throughout the MCO to discuss and fine tune the implementation of the regulations and SOPs for businesses that were given approval to operate during the MCO. 

As many industries were contemplating a shutdown, the timber sector received special approval from the Ministry of Health through the Ministry of Plantation Industries and Commodities (MPIC) to operate under strict adherence to the SOPs during the MCO. More than 500 timber-based companies were granted approvals of which over 70% were furniture and moulding manufacturers.

The Malaysian Timber Council, together with many public and private sector organisations, played a key role in facilitating the smooth operation of the timber sector by analysing and channelling feedback from the industry players to the government through consultation sessions.

MTC had also conducted an industry-wide survey. Among the findings of the survey were concerns over the slowing global and domestic demands, cash-flow management, order fulfilling issues and workforce sustenance. 

The MCO was extended in stages and on May 4 the government implemented the Conditional Movement Control Order (CMCO), which was effective until June 9, allowing most economic sectors, including the timber sector, to operate based on regulated SOPs.

One of the primary hiccups during the MCO involved the supply disruption of timber raw materials which was swiftly resolved during the CMCO when the government granted permission for the transportation of logs from the landing sites to the respective factories. Since then timber-based manufacturers were assured of regular supply of raw materials for their operations.

The timber sector has been literally up and running during the MCO and CMCO with 90% of manufacturers resuming operations and more than 60% now exporting their products.

The timber industry is an important contributor to the Malaysian economy, employing more than 50,000 local workers.

In 2019, it achieved $US5.3 billion in exports, 2.2% of the country’s total merchandise export. The domestic market is worth $US3.2 billion.

The timber sector in Malaysia has been largely operating unhindered, thanks to the quick response and strong support from the government, which has also signalled  more assistance to stimulate the economy and enable businesses to weather the pandemic storm.

MTC, too, in line with its role and obligation to the timber industry has taken the necessary steps to transform its operation model and activities to suit the current and post-Covid-19 business needs.

“It’s a digital push we are looking at now,” said MTC acting CEO Wong Kah Cane. “We simply cannot ignore this fact and businesses must now consider operating on e-platforms.”

Wong added: “Together with the cooperation and collaboration among various ministries, agencies and the private sector, MTC will do its part to ensure that the Malaysian economy and timber industry will be more resilient post-Covid-19.”