Malaysia Furniture Entrepreneurs Association (MFEA) Anniversary Grand Annual Dinner

3 March 2004

Speech by Tan Sri Dato’ Professor Dr Lim Kok Wing at Malaysia Furniture Entrepreneurs Association (MFEA)

I would like to thank the organisers of the MFEA Anniversary Grand Annual Dinner for the opportunity to speak to you tonight.

First, I would like to congratulate the MFEA for organizing the Malaysian Furniture Export Exhibition, or MAFEX 2004, which is a major contribution to furniture sales.

MAFEX 2004 is expected to see sales of 1.6 billion ringgit against 1.5 billion ringgit last year.

MAFEX 2004 is also bigger than MAFEX 2003, in terms of exhibition space and the number of exhibitors. More visitors and buyers are also expected this year.

It is a most commendable effort by all those who have worked hard to make MAFEX a success.

The Malaysian furniture industry has grown spectacularly in the last decade or so.

Total furniture exports rose from a mere 171 million in 1989 to 5.7 billion ringgit last year. They are forecast to grow by 10 percent this year.

For next year, the Government is targeting exports of 7 billion.

Malaysia is today the world’s 10th largest producer of furniture by sales volume. Our market share, however, is rather insignificant, at 2.6% of the global furniture market. This means our growth potential is tremendous.

The local furniture industry will continue to be a major revenue earner for the country. We have the right ingredients for continuing growth – strong Government support, sufficient natural resources and expertise, the talents and the skills.

We have everything that we could need to produce the best work in the world.

What we do not have, however, is the recognition and acknowledgement of our skills and talents as among the best in the world.

This is because the bulk of Malaysian furniture is produced under original equipment manufacturing or OEM franchise for buyers in developed countries. The arrangement benefited the industry in the past. It increased exports by enabling the production of furniture designs suggested and wanted by the foreign buyers.

However, the system limited Malaysia to mass-producing low-end furniture cheaply for others.

This situation cannot continue. It must not continue. The rise of China and Vietnam as cheap – and good – furniture manufacturers make it unsound to continue on the same business model.

Labour costs in China as well as in Vietnam are much lower than in Malaysia. The two countries are also investing in improving designs and greater use of technology.

China has emerged as a dominant force in the furniture export market, second largest exporter in the world. The country now controls more than half of the United States’ furniture market. Cheap and abundant labour, and generous Government incentives, are attracting furniture manufacturers to relocate their production facilities in Vietnam.

Hence, it is time for our producers and exporters to re-brand ourselves, to move up the value chain, to achieve a higher level of performance, to enhance their competitiveness by marketing world-class quality products creatively.

We must progress to original design manufacturing or ODM and original brand manufacturing or OBM, so as to command a higher premium for quality furniture.

We must devote more resources and efforts toward improving designs, re-engineering production processes, embracing research and development, and conducting brand-building campaigns.

We must, first of all, think global if we aim to compete successfully in a globalised world market.

We must benchmark ourselves against the best of the world, and become one of the best in the world. If we do not, we will simply fail.

We must produce furniture the world wants to buy and brand the world wants to own.

Many icons of modern furniture design have become so commonplace and ordinary to us that we take them for granted.

Italy is today the leading furniture exporter in the world, with about 16 per cent share of the global market.

But it may surprise many to learn that Italian furniture designs flourished only in the last 50 years after Italian companies began to invest in a big way in designs. A culture of innovation and creativity was developed.

The combination of industry with creativity and innovative technology transformed the Italian furnishings industry into a global trendsetter.

Fundamental to the image of Italian furniture are innovative lifestyle, imaginative artistry and unmatched creativity.

In anything we do, the attainment of success begins with the orientation of our attitude.

It begins with our belief in our ability to accomplish the task we have before us.

It begins with our willingness to compete with the best in the world.

It begins with our acceptance of change, and our ability to manage change.

It begins with our preparedness to defy accepted norms, and to design better, more practical and more competitive options.

It begins with our determination to become among the best in the world.

The world’s best and most advanced nations are also the world’s most inventive, most innovative. They are also the world’s richest.

These countries generate immense wealth from the products they have created, and the brands they have promoted right around the world.

These countries produce goods that are perceived to be the best in the world, everywhere in the world.

All, with no exception, consider design and creativity a strategic propeller of their national competitiveness. All, with no exception, are driven by innovation.

Resulting from that, these countries have become synonymous with quality, and enjoy the most positive image in the minds of people around the world. And this, in turn, reinforced the perception that whatever they produce must be the world’s best.

Malaysia has the qualities to uplift ourselves to the ranks of the world’s best. We have proven that capability in many areas – in oil and gas, in palm oil, in infrastructure construction.

We must not hold ourselves back.

We are fortunate that we have a forward-thinking Government that is working closely with the private sector to promote innovation and brand-building. This is clearly demonstrated by the range of support services and incentives provided by the Ministry of International Trade and Industry, MATRADE, Malaysian Timber Council and other agencies.

The Government is also undertaking a joint initiative with the private sector to establish the Malaysia Design Technology Centre or MDTC in Cyberjaya.

It is expected to be opened officially by the Prime Minister later this year.

MDTC is a strategic special purpose vehicle designed to integrate local expertise and strengthen our national competitiveness in order to move Malaysian enterprise forward.

It will quicken the development pace of our design industry, connecting more effectively our creative and content creation industries to facilitating agencies; brand building and brand management; and the introduction of more innovative business modeling and more imaginative marketing.

The core intention is to raise the benchmark quality of Malaysian products and creative services.

To fulfill this mission, MDTC will work in partnership with Malaysian industry, including the furniture industry.

May I propose that a collaborative partnership be established between MDTC and MFEA. The mission of the partnership will be to build creative human capital and enhance the quality of our innovative capacity. It may be called the Malaysian Furniture Design Council.

Thank you for this opportunity, and I wish you success in your exhibition and seminar.

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