Can Timber Drive Malaysia's Next Growth Story?

Speaker A: This is a podcast from BFM 89.9 the Business Station.

Speaker B: You're tuning in to the BFM Breakfast Grill, powered by Umobile's Ultra 5G, the next gen network for Malaysia.

Speaker C: BFM 89.9 the Business station. My name is Rich Bradbury and welcome to the Breakfast Grill. So the Ministry of Investment, Trade and Industry wants a headline grabbing 15% export spike this year. That's a steep mountain to climb off the back of last year's 21.5 billion ringgit floor. Make no mistake, timber is still the heavy engine room of Malaysia's primary economy, sitting right behind palm oil and rubber as our third largest commodity export. Nearly half of that is finished wooden furniture and a full quarter of the entire supply chain goes off to the U.S. long term, the state has massive designs for the sector anchoring it as a core pillar of the national agri, uh, commodity policy to force a legacy industry into the modern eras of high tech automation and strict sustainability. The agency holding the briefcase and tasked with engineering this entire transition is the Malaysian Timber Industry Board, a statutory fixture since 1973. And to talk about navigating some of these volatile global markets that we currently have, navigating steep tariffs and hitting these numbers, we're joined by the man running the board for the last two years, MTIB Chairman, YB Datuk. Larry Sing. Wei Hsien. Yb, welcome to the show.

Speaker D: Thank you Richard.

Speaker C: Starting off, we should perhaps begin by exploring the primary mission of the agency.

Speaker D: So Malaysian Timber Industry Board is a statutory body under the Ministry of Plantation and Commodities, uh, mandated to spearhead the development of Malaysian timber industry. So our mission is to enhance the competitiveness, sustainability and global reputation of Malaysia's timber industry by uh, promoting value added manufacturing, uh, strengthening industry capabilities, facilitating trade, encouraging innovation and technology adoption, and ensuring effective regulation across the timber value chain.

Speaker E: So ultimately MTIB is committed to building

Speaker D: a resilient, sustainable and internationally competitive timber

Speaker E: industry that continues to contribute significantly to

Speaker D: Malaysia's economic growth while supporting responsible forest management.

Speaker C: So what programs or services does the agency then provide to fill that purpose? And how do you coordinate with Federal, State, um, uh, and other members of the timber industry?

Speaker E: Okay, so basically uh, MTIB offers a comprehensive range of programs and services that

Speaker D: support the entire value chain, um, which includes the licensing of uh, timber exports, uh, industry development and capacity building programs, uh, timber technical advisory and consultancy services, uh, production innovation, design, uh, development, uh, skills training, uh, workforce and development through uh, Wistac, um, and also the Promotion of Automation and Industry 4.0 adoption, um, market Promotion also is done through international trade fairs and business matching, uh, entrepreneurship development particularly for the Buhributra uh participation and also the facilitation of sustainability certification and compliance with international market requirements. So these are ah, the initiatives that MTIB has done and also in regards to the question on the federal government and state government's uh, um, coordination. So what we do in MTIB is that uh, we actually do a close collaboration among various stakeholders um because the forest resources are actually managed under the state and uh, industrial development is actually driven by the federal government. So we have to work with other parties like for instance the Ministry of Plantation and Commodities, the Forest Department of uh, the various respective states and also the National Forest Forest uh, Department, uh, in Peninsula Malaysia uh, together with the Sabah Forestry Department, the Sarak Forestry Corporation and also uh, other agencies, um, which is related to timber, like for instance the Malaysian Timber Council, Malaysian Timber Certification Council as well as uh, MAIDA and also matrate, uh in addition to the various uh, uh industry players as well.

Speaker C: That's a lot to be dealing with.

Speaker D: There's a lot of people involved.

Speaker C: Yeah, yeah. Okay, can we just talk about some numbers? So MITI set the ambitious target as I started off with you know, a 15% increase in wood based product exports this year. But the Latest data from 2025 shows total exports actually contracted by over 6% to 21.5 billion ringgit. Major lines like wooden furniture, veneer, even fiberboard are all dropping. Where is that 15% growth likely to come from then?

Speaker D: I think it's a bit difficult to uh, achieve the 15% goal for the time being, uh simply for the reasons that you have mentioned. Um, in addition to that there are also many global challenges that we are facing. Uh, as you know, what's happening in the Middle east, what's happening between Ukraine and Russia as well. And on top of that we have uh, issues relating to the tariffs in the US and also um, also other uh, global challenges uh, that we're facing in relation to rising costs of freight, operating expenditure etc. But what we are trying to do, uh, we take into consideration all these

Speaker E: challenges that we are facing today and

Speaker D: also we are working uh, through our National Timber Industry strategy plan of 2026-2030

Speaker E: which is also closely aligned with the

Speaker D: National Ag commodity policy of 2021-2030 and to see how we can uh, to bridge whatever challenges that we are facing today and try to achieve uh, the sort of targets and goals that we have set forth. Uh, one of the strategic initiatives that we are doing is to expand and diversify existing markets. So our existing markets traditionally have uh, been like the United States, Japan, Europe, Australia, China and also asean. And today we are looking at other markets in addition, like the Middle east for instance or Central Asia, India, or even Africa, Latin America and Oceania. Um, there are also a few other high growth markets that we are targeting in particular, uh, Saudi Arabia, the uae, um, Oman, Qatar, Kuwait, Costa Rica, Chile, Poland, Norway and also Guam. Um, uh, in addition to that, uh, we'll also be facilitating 17 international trade promotion, uh, programs, uh, which includes trade

Speaker E: missions, uh, international exhibitions, business matching sessions,

Speaker D: strategic buyer engagements, and of course uh,

Speaker E: we also financing micro, uh, SMEs to

Speaker D: participate to export promotion programs, international exhibitions, while strengthening SMEs, export readiness and competitiveness. Uh, in addition to that there's also uh, enhancing global market access and international promotion. I uh, mean to say that we have already got 17 existing bilateral and regional free trade agreements which is, um, like for instance the Regional Comprehensive Economic, uh, Partnership RCEP or the Comprehensive and Progressive Agreement for Trans Pacific Partnership, cptpp,

Speaker E: uh, and also various others, you know.

Speaker D: Um, so these are, these will help us grant market access and also provide, uh, preferential tariff treatments for Malaysian timber exports.

Speaker C: Because I was going to ask you about, um, the MITB has been kind of uh, advising the industry to pivot away from the US for some time. Correct. Um, but when I was looking at the alternatives, normally it would have been Singapore. Uh, exports dropped 7% I believe. India, uh, dropped nearly 8. The Netherlands dropped 12. But now you're giving me other examples of where we're looking elsewhere.

Speaker E: That's right.

Speaker C: Uh, but let's just come back to the tariffs then. You mentioned the tariffs there. With the US Locking out specific countries with steep tariffs, there's a very real dangerous temptation for third parties to wash their supply chains through Malaysian ports. Uh, what ironclad enforcement has MTIB put on the water to stop this kind of tariff circumvention.

Speaker D: So Malaysia has reinforced its regulatory, uh, framework by strengthening the export licensing, enhancing custom, uh, inspections, uh, verifying certificates of origin, and also improving interagency collaboration and introducing more robust digital documentation systems. Uh, we also work closely together with the Royal Malaysian Customs Department and other enforcement agencies, agencies to ensure that Malaysia remains a trusted and also credible trading partner while safeguarding the integrity of its business exports. Of course, we also discussed this at length during the board meetings on how we can actually, um, target companies registered in, uh, Malaysia, uh, by foreign entities, for instance, that are using transshipment, uh, uh through Malaysia. Uh, of course this is a very um, uh this is very important for us to address simply because it also affects the whole industry as a whole. And countries of course uh, in the past um, have actually indicated uh their seriousness uh in also trying to stop trans shipment. So it's very important that Malaysia also takes the initiative to actually curb all these potential loopholes uh before we actually um, get um informed uh officially. So I think this is to say

Speaker C: you are heading it off before.

Speaker D: Yes, of course we are heading it off. Uh we also deliberating at the board level and we are trying to figure out ways and means to actually um, to tighten our processes uh so that uh, there is no um, opportunity for transitment uh to arise.

Speaker C: Just before we take a break then, I mean just to go back to the US because it still remains the single largest export destination accounting roughly for 25% of all total um, exports. But with that 19% tariff, I mean admittedly it was 25% previously. How is the timber industry meeting that challenge? And how long can Malaysian manufacturers absorb that 19% tax before they're priced out by global competitors?

Speaker D: Well, I think Richard has um. As you are well aware the uh,

Speaker E: United States have also changed its position

Speaker D: quite a fair bit, you know, over

Speaker C: the last few years.

Speaker D: Yes. So uh, initially we of course uh, we have received this uh, um, major news that there's this 90% uh reciprocal tariff uh under the International Emergency Economic power Act of 1977 in uh, last year 2025.

Speaker E: And of course uh, following the United

Speaker D: States Supreme Court's ruling in February 20uh declaring that the reciprocal tariffs are Invalid,

Speaker E: uh the 90% tariffs imposed on Malaysia was rendered null and void. And then of course subsequently the United States introduced another temporary 10% global tariff under section 1 to 2 of the Trade act of 1974. And of course this is only valid for about 150 days which is due to expire on the 24th of July this year. Um, um. Of course although most imported goods are subject to the 10% uh temporary tariff, specific exemptions have been granted for products considered essential to the United States. So the escalation of tariffs by the United States has created significant challenges for um, Malaysia's timber and furniture industry, as you know, and increasing market uncertainty and disrupting global supply chains. So Malaysia's strong position in this market has been built over decades through consistent uh, product quality, reliability, long standing partnerships with American buyers, reflecting a mutually beneficial trading relationship. So in response the industry is encouraged to diversify its markets to all the Countries that I mentioned earlier and so that we reduce our dependency on a single market.

Speaker C: Hold that thought. We're going to take a short break here on the Breakfast Grill. I'm ah, speaking with YB Datuk. Larry Tsung Wei Hsian, he is the chairman of mtib, that's a Malaysian timber industry board. Don't go anywhere. This is the Breakfast grill here on BFM 89.9 the Business Station.

Speaker B: You're listening to the BFM Breakfast Grill with you mobile's Ultra 5G, the next gen network for Malaysia.

Speaker C: Welcome back to the Breakfast Grill. I'm Rich Bradbury here on BFM 89.9. I'm here in the studio with YB. Dr. Glari Sung Wei Hsien, he is the chairman of MTIB. That's the Malaysian timber industry board. For decades the kind of critique has been um, we're stuck in an OEM model. We build a desk, somebody else puts their logo on it, somebody else takes the margin. We don't necessarily own the brand. Why has this transition to original brand manufacturing kind of stalled? And what is MTIB doing to build a made in Malaysia identity that actually means something globally?

Speaker D: Okay, so I uh, think to address this moving from OEM to OBM requires long term investment, innovation, uh, branding, uh, product design, uh, research and development, uh, intellectual property protection and also international marketing. So for us we encourage companies to build a strong Malaysian uh brand capable of competing globally. Uh, but developing these original brands also it's important uh, because it enables companies to capture greater value, uh, strengthen customer loyalty, improving long term competitiveness. And I can see uh, from, from our m, various um, trade exhibitions that we do locally. Our products are ah, actually there are also companies that are actually having their own brands and uh, attaching it to them. But we also have to recognize that uh, Malaysia has very good quality uh timber. And um, because of that there are different countries and companies that are actually coming to Malaysia to require Malaysia to produce oem, uh, uh, furnitures. So I think we cannot um, totally pivot away from OEM because it is actually generating lots of revenue for the country. Lots of exports are done through that way. Uh so I think gradually more and more companies will create their own brands and we help to facilitate that.

Speaker C: Okay, I want to talk a little bit about the equity gap then. So decades of master plans, initiatives and state backed uh, assistance Bhumi putra entrepreneurs account for less than 1% of total exports. That's 1%. Do you think this is a failure of market design? Is it a failure of Market access or are uh MTIB's grants just not reaching the people who need to scale up?

Speaker D: I would disagree with that of course uh for us mtib we are uh committed to increasing uh Burma Bhutra participation uh through entrepreneurship, uh development programs, uh technical training, business uh advisory services, product development assistance, uh market access initiatives, uh business matching programs and participation in domestic and international uh trade exhibitions. Uh we also collaborate with uh strategic

Speaker E: partners to facilitate access to financing and

Speaker D: capacity building programs as well.

Speaker E: And our objective is to uh develop

Speaker D: a more competitive export oriented bui butra uh timber entrepreneurs capable of participating across the entire timber value chain.

Speaker E: Uh so uh MTIB's goal is not

Speaker D: just to create a number of butra

Speaker E: entrepreneurs but also to cultivate highly competitive

Speaker D: export oriented entrepreneurs who can successfully participate in the entire timber value chain from raw processing to high value finished products. But unfortunately uh, from our past experience there have been cases where uh when we incur encourage them or we push them a bit too hard, uh they do not, not only do they not succeed but they end up closing shop. So I think we have to manage this uh uh carefully um to let them grow uh organically, domestically uh first and when they're able to size up then we of course uh uh push encourage them to export.

Speaker C: When you said they end up closing shop, why do you think that is? What is?

Speaker D: Um, I think maybe perhaps in terms of financing issues, uh perhaps in terms of the management in terms of um how they actually conduct uh the business. Um and also the way of doing business internationally and domestically could also be

Speaker E: very different as well depending on which

Speaker D: kind of markets to uh uh do business with. Uh so I think these are all the challenges that are faced by the industry.

Speaker C: Speaking of challenges, let's talk a little bit about uh labor. Every sawmill and factory owner in, in the country complains about labor shortages no matter what industry you're in. But often a foreign workforce is treated as a bit of an absolute dependency. Uh at the same time we talk about AI and automation. But let's connect the dots. Is the government's habit of easing foreign labor quotas acting as a bit of a crutch that deincentivizes these factories for modernizing?

Speaker D: Um, I think the labor uh shortages

Speaker E: of course remain as a critical challenge in um however addressing these issues require more than just simply uh filling uh vacancies. Uh it demands a fundamental transformation of the workplace, of the workforce. Uh in 2025 for instance, Malaysia's timber industry supported an employment ecosystem of 179,000 UH workers and currently the workforce of the timber industry sector comprise 40% local UM workers and 60% foreign workers. So for many years the timber industry has been associated with uh3D image which is dirty, dangerous and difficult. Uh so this perception must change and the future of Malaysia's timber industry cannot

Speaker D: rely on manual labor.

Speaker E: It has um to move forward um to industrialize, to optimize so to speak. And also we must transform the industry's image from 3D to 3S which is skills, sustainability and safety. Uh so this means becoming more skill intensive, safer and also environmentally sustainable industry. Uh consequently um uh factory workers must also be upskilled and transform into highly skilled professionals while uh manufacturing facilities and production processes must accelerate the adoption of automation as I mentioned earlier uh advanced technologies uh today the industry urgently needs smart machine operators, uh automation technicians, uh product designers and manufacturing data analysts who combine technical expertise with a strong understanding of sustainability. To achieve this the government through MTIB and the Wood Industry Skills Development center which is wistac, UH continues to strengthen strategic collaborations with um UH skills institutions, higher education institutions and industry players as well. Uh our focus is to provide industry relevant training that meets current market needs through several key initiatives. For instance the recognition of prior learning. Uh this initiative formally recognizes the existing skills, knowledge and experience of workers enabling them to obtain recognized qualifications and also improve their career progression as well. And the other is UH Train and Place program which is UH UH to ensure that participants receive quality industry uh aligned training before being placed directly into employment. And finally we have what is called Skills Agri Commodity Training Scheme which is slam uh a structured skills development program that emphasizes practical training and enhances participants employability. So in addition MTIB continues to uh deliver uh scheduled courses, customized UH training programs and the Medani Upskilling program to further enhance the competencies uh of the existing workforce. Uh I'm confident that this comprehensive and multi pronged approach will develop a highly skilled, competitive and resilient workforce capable of meeting the evolving needs of Malaysia's uh timber industry.

Speaker C: Yb, thank you so much for your time this morning.

Speaker D: Thank you so much Richard.

Speaker C: Folks, you have been listening to the Breakfast Grill where I've been speaking to YB Datuk, Larry Sang Wei. He is the Chairman of the of mtib, the Malaysian Timber Industry Board. If you missed any part of this show, don't forget you can download the podcast wherever you normally get it from. This has been the Breakfast grill here on BFM 89.9 the Business Station that

Speaker B: was the BFM Breakfast Grill brought to you by Umobile's ultra 5G ultra fast speeds with stronger seamless coverage. This is Malaysia's Next Gen network.

Speaker A: You have been listening to A podcast from BFM 89.9, the Business Station. For more stories of the same kind, download the BFM Appliance M.