Clothing manufacturers and retailers lament RM 163million daily loss as Covid-19 closes operations

KUALA LUMPUR (July 16): The Malaysian Fashion, Textiles and Clothing Federation (FMFTA) today claimed that the industry in 2020 suffered an estimated loss of RM163 million per day as Operations in Malaysia were closed due to movement restrictions imposed by Covid-19 to curb the pandemic, which reduced the value of the sector’s exports in 2020 to around RING 21 billion from Rings 27 billion a year earlier.

In a statement distributed to reporters covering FMFTA’s virtual press conference today, the federation said the industry is calling on the government to move the industry to phase two of the National Recovery Plan (PNR) of phase one to allow the sector to resume its activities and ensure its survival.

“The federation also reiterated that its members could not survive if they waited for the transition from phase 1 to phase 3 without operating given the current pandemic situation in Malaysia,” said FMFTA.

According to FMFTA’s statement, the federation was established on October 29, 2019 by the Ministry of International Trade and Industry with the mission of uniting all associations of the Malaysian textile and clothing industry.

FMFTA said it has 12 association members including Malaysian Textile Manufacturers Association, Malaysian Knitting Manufacturers Association, Malaysian Shoe Manufacturers Association, Persatuan Wanita Bumiputra Dalam Perniagaan Profession Malaysia (PENIAGAWATI) , Malaysian Garment Marketers Association, Malaysia Textile and Apparel Center, PW Gold and Silver Ornement Merchants Association, Malaysian Gifts & Premium Association, Persatuan Batik Malaysia, Malaysia Garments Wholesale Merchants Association, Asean Designers Guild and KL Fashion Week.

FMFTA said that based on the PNR, the fashion, textile and clothing industry is listed in phase three of the PNR.

“FMFTA has expressed deep concern that the industry cannot afford another shutdown and faces losses estimated at RM 163 million per day,” FMFTA said.

FMFTA said in the statement that four renowned foreign-owned multinational textile and clothing factories have closed operations in Malaysia and laid off around 6,000 employees in 2020 as the industry grapples with the impact of the order. Malaysia’s Movement Control System (MCO) which was first implemented in March 2020 to curb the spread of the pandemic.

Since then, many local manufacturers in the industry have shut down or downsized their operations, leading to an estimated 15,000 job losses in the industry, according to FMFTA, which did not specify the names of the four renowned multinational textile factories and clothing belonging to foreigners who had closed their operations in Malaysia.

FMFTA Chairman Datuk Seri Tan Thian Poh said in the statement that since the first MCO, commonly referred to as MCO 1.0, 15% of fashion, textile and clothing companies in Malaysia have gone out of business and 30% are on the market. point of terminating their businesses due to lack of cash flow amid Covid-19 uncertainties.

He said the situation would worsen if they were not allowed to operate under phase two of the PNR.

According to FMFTA’s statement, members of its board urged the government to allow the industry to operate in phase two of the PNR, as companies may no longer be able to continue to absorb the daily losses of around $ 163 million. of RM due to the extended shutdown.

In today’s virtual press conference, Tan said that Malaysia’s fashion, textile and clothing industry is one of the major contributors to the country’s manufactured exports, especially to the United States, Europe, Turkey and other parts of the world since the 1970s.

For 2020, the export value of Malaysia’s fashion, textile and clothing industry fell to RM21 billion from RM27 billion in 2019 due to the pandemic, he said.

“We believe the situation will deteriorate further and beyond the rescue, as some of our members face litigation and risk losing their overseas clients.

“These foreign customers will move their future orders to other countries due to the uncertainties if we are not allowed to operate soon,” he said.

Tan had also explained to reporters how the estimated daily loss figure for Malaysia’s fashion, textile and clothing industry was calculated.

According to him, the annual manufacturing sales value for the industry in 2020 was around RM24.23 billion, hence the loss of revenue of the manufacturing segment of the industry due to the shutdown due pandemic has been estimated at RM80.8 million per working day.

He said industry retailers recorded a combined annual sales value of approximately RM29.6 billion in 2020, hence the loss of revenue of the retail segment of the industry due to of the closure was estimated at RM82.2 million per day.

“Manufacturers are no longer able to continue to absorb the enormous daily losses due to the extended shutdown.

“Some retailers may choose to shut down their business operations due to their inability to pay rent and wages due to zero income caused by the business shutdown during the MCO,” he said.

After taking into account the industry’s estimated daily losses of RM163 million in 2020, Tan said today that the FMFTA believes that it is very urgent that the industry be allowed to operate in phase two of the PNR to prevent industry collapse beyond recovery.

As the industry employs around 500,000 people across the country, a prolonged shutdown will put them at risk of losing their jobs and worsen Malaysia’s unemployment rate, he said.

“We predict that more than 30% of retailers will collapse before phase three of PNR and 150,000 employees will be made redundant,” he said.