pon the 1957 independence of the Federation of Malaya, comprised of the former British
colonies on the Malay Peninsula in southeastern Asia, tin and rubber were the economy’s mainstays.
Malaysia, as the country is known today, came into being in 1963, when Singapore and the East
Malaysian states of Sabah and Sarawak on Borneo’s north coast – also former British colonies –
joined the federation. Singapore withdrew from the federation in 1965. In 1971, the country began
to shift away from its raw material roots to a multi-sector economy with exports – especially
electronics, but also textile and apparel products – at its heart. That change propelled the growth
of the country’s gross domestic product, estimated to be US$290.2 billion in 2005 on a
purchasing-power-parity basis, which has continued to grow recently despite global economic
downturns and external pressures.
According to the Malaysian Industrial Development Authority (MIDA), the government’s
industrial development promotion and coordination agency, Malaysia’s manufacturing focus has
resulted in the continued growth of the textile and apparel industry — the sixth-largest
contributor to total earnings from manufactured exports in 2004. In 2005, the industry became the
seventh-largest contributor of export earnings in the manufacturing sector, Malaysia’s Ministry of
International Trade and Industry (MITI) noted in its 2005 trade and industry report. Textile and
apparel goods made up 2.5 percent of exported manufactured goods that year.
According to the Malaysia External Trade Development Corp. (Matrade), MITI’s external trade
promotion arm, Malaysian-produced goods include fibers; man-made- and natural-fiber yarns; woven
cotton and man-made-fiber fabrics; knitted and crocheted fabrics; tulles, lace, ribbons, trimmings
and embroidery; special yarns, textile fabrics and related products; floor coverings such as
carpets and rugs; home textiles; and industrial textiles such as geotextiles, dryer fabrics, press
felt, ropes and cords, and car seat fabrics. Apparel items include T-shirts, blouses, pants,
undergarments, skirts, jackets and overcoats, among others. Malaysian-made accessories range from
industrial, sewing and embroidery thread; zippers and buttons; drawstrings; labels; and laces to
collars and cuffs; cotton tape; polyester padding; and interlining.
The Batu Pahat, Malaysia-based Malaysian Knitting Manufacturers Association (MKMA), citing
Matrade, reports that from 2004 to 2005, the major exports of the textile industry were worth
approximately $1.4 billion and accounted for 52.6 percent of total textile and apparel exports.
Such exports included textile yarn; woven man-made-fiber fabrics; special yarns, special textile
fabrics and related products; and woven cotton fabrics. Of those products, textile yarn exports had
the greatest value at $666.5 million — a 19-percent increase over 2004 exports, followed by woven
man-made-fiber fabrics at $249 million — a 6.1-percent decrease from 2004.
The apparel and clothing accessories industry, on the other hand, exported goods worth $1.3
billion in 2005 — a 2.1-percent increase over 2004 exports. The major exports in that category were
— in rank order — other textile apparel products; men’s non-knitted or -crocheted apparel; women’s
knitted or crocheted apparel; women’s non-knitted or -crocheted apparel; and men’s knitted or
crocheted apparel. The export of products in the other textile apparel subcategory grew by 16.9
percent from 2004 to $380.3 million in 2005. Men’s non-knitted or -crocheted apparel and women’s
knitted or crocheted apparel exports were worth $211.2 million and $197.4 million, respectively.
Total industry exports grew to $2.7 billion in 2005, the year textile and apparel
Multi-Fiber Arrangement quotas were repealed, from $2.5 billion in 2004. According to MITI, the
reimposing of quotas by the United States on apparel and textile goods from China partly helped
For the first quarter of 2006, the industry’s exports continued to grow, reaching $718.4
million, MKMA notes. That figure represents an 8-percent year-on-year increase.
Major Trade Markets
The United States was Malaysia’s top export destination in 2005, accounting for 19.7 percent
of total exports, Matrade reports. Total Malaysian exports to the United States in 2005 grew to
$27.6 billion from $23.7 billion in 2004. Likewise, the United States was the top destination for
Malaysian textiles and apparel, importing goods worth $770.7 million, or 28.5 percent of total
Malaysian textile and apparel exports. Malaysian textile and apparel 2005 exports to the United
States were down slightly from 2004, when they totaled $773 million. In 2003, Malaysia exported
apparel and textiles to the United States valued at $704.5 million, down 4.8 percent from 2002.
According to the US Department of Commerce Office of Textiles and Apparel’s (OTEXA’s) July
27, 2006, Major Shippers Report, Malaysia accounted for 0.81 percent in million dollars and 0.67
percent in million square-meter equivalents (SMEs) of total textile and apparel imports into the
United States. However, Malaysian exports of note included gloves and mittens made of
silk/vegetable fiber blend, which captured 42.4 percent and 8.7 percent of the respective US import
market in terms of million dollars and million SMEs, respectively. Oxford cloth made up 25.4
percent of the share of the total import market in that category in millions of dollars, or 24.3
percent in million SMEs.
A free trade agreement (FTA) is currently in negotiation between the United States and
Malaysia, the United States’ 10th-largest trade partner, with an estimated $44 billion in bilateral
trade in 2005, and its largest trade partner in southeastern Asia, the US Commercial Service
reports. Some Malaysian industry associations, such as the Malaysian Textile Manufacturers
Association and the Federation of Malaysian Manufacturers, both based in the capital city of Kuala
Lumpur, have called the potential FTA beneficial, saying it would reduce or do away with import
duties and increase market access for Malaysian exports to the United States. When the FTA
negotiations were announced, then-US Trade Representative Rob Portman said the FTA could remove
trade and investment barriers; and increase competitiveness, market access and prosperity for both
countries. Textile World Washington Correspondent James A. Morrissey recently reported that US
textile manufacturers were unlikely to protest the FTA, given Malaysia’s textile and apparel
exports make up such a small percentage of total imports to the United States.
The United States also is the largest foreign investor in Malaysia with US private
investment totaling more than $30 billion, particularly in the oil and gas, manufacturing, and
financial services sectors, the US Commercial Service notes. The country’s government has nurtured
foreign direct investment and has strived, since the late 1980s, to privatize large industries that
were once state-controlled. As a result, foreign investment in manufacturing has soared.
According to MITI, other major textile and apparel export destinations in 2005 were Turkey,
accounting for 6.2 percent of the market, or $167.9 million — a 60.7-percent increase from 2004.
Singapore and the United Kingdom followed, with $121.6 million and $119.6 million, respectively.
Japan, which signed a FTA with Malaysia in July 2006, accounted for $118.8 million; and China, with
$117.8 million, rounded out the top six export destinations for Malaysian textiles and apparel.
With regard to imports, Malaysia imported textiles and clothing worth $1.3 billion — a
slight increase over 2004 imports. The top import sources for the industry last year were, in rank
order, mainland China, accounting for approximately $394.7 million; Taiwan, which MITI evaluated
separately from China, $148.6 million; Indonesia, $113.1 million; Thailand, $111.1 million; and
Japan, $89.9 million. Main imports included woven man-made-fiber fabrics, textile yarn, fabric
apparel accessories, knitted and crocheted fabrics, and women’s apparel.
Malaysia’s textile industry is known for a broad range of activities including
polymerization and man-made-fiber production, spinning, weaving, knitting, texturizing, dyeing, and
printing, MIDA notes. Malaysian companies also manufacture made-up apparel and other textile goods
such as home textiles, ropes and carpets; as well as nonwoven fabrics for personal care, made-up
apparel, construction, engineering and furniture applications.
In 2000, the latest year for which information is available, Malaysian textile-manufacturing
establishments numbered 530, as reported in the 2005 Association of Southeast Asian Nations
Statistical Yearbook. There were 2,682 facilities in Malaysia that produced apparel or dressed and
dyed fur. According to a 2003 report from the US International Trade Commission entitled “Textiles
and Apparel: Assessment of the Competitiveness of Certain Foreign Suppliers to the US Market,” the
Malaysian industry comprised 237 mostly small and medium-sized firms in 2000. MIDA reports that as
of July 2005, there were about 900 companies in production, employing more than 68,000 workers.
According to MITI, the textile and apparel industry employed 66,506 people last year, a
3.9-percent decrease from 2004, in a country with an estimated July 2006 population of 24.4 million
people and a labor force of approximately 10.7 million. MITI attributed the employment decline to
greater production automation and increased focus on producing high-value-added products.
The industry’s 2005 productivity was up 8.1 percent from 2004 for a sales value per employee
of $34,644, mainly the result of high demand in the man-made-fiber spinning and apparel subsectors.
The textiles sector recorded a 4.8-percent decline in sales value per employee to $55,839, which
was attributed to competition from countries with lower production costs. Sales value per employee
in the apparel sector, on the other hand, grew by 10.6 percent to $21,829, a rise resulting from
the development of fashion and design niche markets and more demand for apparel manufacturing,
accessories, and merchandising.
According to the Switzerland-based International Textile Manufacturers Federation’s (ITMF’s)
2005 edition of its International Textile Machinery Shipment Statistics report, Malaysia’s spinning
capacities for 2004 numbered 650,000 short-staple spindles, 35,000 long-staple spindles and 6,000
open-end rotors. Those capacities were the same in 2003. The country’s weaving capacities in 2004
were 4,000 shuttleless looms and 1,200 shuttle looms, also identical to the 2003 reported numbers.
There were no reported 2005 shipments for short-staple, long-staple and false-twist
spindles, nor for open-end rotors and flat-knitting machines. However, cumulative texturing
shipments from 1996 to 2005 numbered 4,968 for double-heater false-twist spindles. Two
rapier/projectile, 132 air-jet and zero water-jet made up the reported 2005 shipments of
shuttleless looms. Textile machinery manufacturers shipped a total of 4,165 shuttleless looms and
27 shuttle looms from 1996 to 2005. Shipments in 2005 of circular-knitting machines with working
widths greater than 165 millimeters totaled 60. ITMF reports that in 2005, Malaysia invested in
very few finishing machines, a category that was included in its annual report that year for the
By taking advantage of its location along the southern South China Sea and the Strait of
Malacca, one of the most important shipping lanes, Malaysia has been able to transform its
commodity-based economy to one focused on exports. What lies ahead for Malaysia’s textile and
apparel industry depends upon the steps the sector takes to increase its worldwide competitiveness.
Matrade notes that textile and apparel manufacturers are striving to increase productivity
through flexible, automated manufacturing systems; research and development investments; and
increasing the technical competency of its employees. In addition, Malaysian companies are
collaborating with foreign investors as well as marketing its homegrown brands locally and abroad.
According to MIDA, the industry also will need to focus on manufacturing higher-value-added
products, increasing production of nonwoven fabrics and primary textiles, and adding more
wet-processing facilities. Through these steps, MIDA says, the various sectors have the potential
to become a developed industry cluster.
Malaysia At A Glance
• Capital: Kuala Lumpur
• Government type: constitutional monarchy
• Currency: ringgit
• Gross domestic product (GDP): $290.2 billion (2005 estimate) on a purchasing-power-parity
• GDP real growth rate: 5.3% (2005 est.)
• Population: 24.4 million (July 2006 est.)
• Population growth rate: 1.8% (2006 est.)
• Median age: 24.1 years
• Labor force: 10.7 million (2005 est.)
• Total area: 329,750 kilometers2
• Land use: arable land – 5.46%, permanent crops – 17.54%, other – 77% (2005)
• Natural resources: tin, petroleum, timber, copper, iron ore, natural gas, bauxite
• Exports: $147.1 billion free on board (f.o.b.) (2005 est.)
• Export partners: United States (US) – 19.5%, Singapore – 15.4%, China – 11.3%, Japan –
8.3%, Thailand – 4.6 %, Hong Kong – 4.1 % (2005)
• Imports: $118.7 billion f.o.b. (2005 est.)
• Import partners: Singapore – 26.4 %, Japan – 11%, China – 9.2%, US – 9.1%, Taiwan – 5.4%,
Thailand – 4.9%, South Korea – 4.9 percent, Indonesia – 4.2% (2005)
• Telephones, main lines in use: 4.4 million (2004)
Source: The World Factbook, Central Intelligence Agency (CIA)