Panels & Furniture Asia Sep/Oct 2019

THE MALAYSIAN MDF MANUFACTURERS ASSOCIATION ( MMMA ) 72 N E W S L E T T E R SEPTEMBER/OCTOBER 2019 MALAYSIA TIMBER INDUSTRY: THE WAY FORWARD By Peter Fitch MMMA Newsletter for PF Asia Sep/Oct 2019 I have previously commented and continued to draw the parallels between the Malaysian MDF Industry, the Malaysian Wood Based Industry and the Malaysian Economy. The successes, failures, achievements and challenges are shared and are common across these sectors. When one thinks about Malaysia, the iconic Twin Towers will symbolise the country and Petronas is probably the best known brand internationally. In the timber industry, Malaysia is renowned for tropical timbers and plywood, and more recently for its high quality Rubberwood Furniture and MDF. Malaysia should rightfully be proud of its past achievements, but it must also be very clear and focused on what it wants to achieve for the future. I have been in Malaysia long enough to have witnessed many campaigns with the goal of achieving ‘Developed Nation Status’. The first campaign set the target of achieving this by 2020 under ‘Wawasan 2020’. To be fair to the current government, this target has now been extended to 2025. What does ‘High Income Developed Nation’ status mean? Under the United Nations (U.N.) definition, this means achieving a Gross National per Capita Income (GNI) of USD12,376, a Human Development Index (HDI) of greater than >0.80, and significant industrialisation in the tertiary and quaternary sectors (High Value and Innovative companies). So howwell does Malaysia and in particular the Timber industry perform within these areas? GrossNationalIncome(GNI) In the latest 2018 Malaysian GNI per capita figures, it was reported as being USD10,460. Falling just USD1,915 short of the U. N. target of USD12,376. Looking at these figures in isolation, we certainly hope that Malaysia will achieve this target by 2025. However, when we look at the historical figures, we see that the Malaysian GNI actually peaked at USD11,140 in the year 2014 and has fallen short over the past couple of years. As a result, Malaysia has been stuck in what is referred to as the Middle Income Trap. The GNI calculation is based on Value Creation in USD terms divided by the mid-year population. It is, in effect, a measure of the country’s productivity. In comparison, the GNI of Thailand, Indonesia and Vietnam increased, all be it from a lower base during the same time period (Thailand USD5,760 to USD6,610 a 13% increase, Indonesia USD3,620 to USD3,840 a 6% increase and Vietnam USD1,880 to USD2,400 a 22% increase). Human Development Index (HDI) The HDI is calculated based on Life Expectancy, Years of Schooling and Income per Capita. In this respect Malaysia scores quite high and is officially classified as having a high Human Development Index of 0.802 in 2018. Malaysia is globally ranked #57, slightly behind Kuwait, Uruguay and Belarus. In comparison, the HDI figures for Thailand, Indonesia and Vietnam were 0.755, 0.694 and 0.694 respectively. The highest scoring ASEAN country is Singapore globally ranked #9 with a score of 0.932. Unfortunately, the weaknesses of using only the HDI figure in isolation is that it does not take into effect the quality of education nor inequality in gender and race. For example, a recent study of the average 15-year-old students’ mathematics ability score has ranked Malaysia as being lower than Thailand and Vietnam and only marginally higher than Indonesia. The PISA study gave the highest Asian scores to China (Shanghai) followed by Singapore, Taiwan, Korea and Japan. In a statistical HDI update from the United Nations, it commented that