Overview
Part 1 comprised Understanding the textile & apparel industry, production process and global trade in textiles and apparel. Part 2 looked at development of world textile & apparel regulations, voluntary export restraint, General Agreement on Tariffs and Trade, STA & LTA (Cotton Arrangements), the Multi-Fibre Arrangement (MFA), Agreement on Textiles & Clothing and Rules of Origin in the textile & apparel industry. Part 3 analysed the Impact of the MFA, birth of new players, web of protectionism, quotas and factors affecting demand for textiles and apparels.

2.0 Malaysia’s Textile and Apparel Industry: Structure and Players
The textile industry in Malaysia is integrated from the production of synthetic fibres and fibre’s chemicals down to the manufacturing of apparels and industrial textiles such as non-woven fabrics, geotextiles, webbings, ropes, apparel accessories, fishing nets, gloves, bags, carpets, etc. In the following discussion, the word ‘apparel’ will be used in place of ‘garments’ and ‘clothing’ as used in various statistical reports so as to avoid confusion.

2.1 Primary & Made-up Textiles Sub-sector
In terms of synthetic fibre production, there are only 2 plants involved in polymerisation activity, namely Hualon Corporation (M) S/B (Hualon), a subsidiary of Hualon Corp of Taiwan, and Penfibre S/B (Penfibre), a subsidiary of Toray Industries Inc of Japan. Their products include polyester/nylon chips and polyester staple fibre.

In the spinning sub-sector, there are 11 spinning/texturising mills in 2003. Approximately half of them are integrated with either knitting or weaving operations. Among the products produced are cotton, Chief Value Cotton (CVC), polyester/cotton, polyester/rayon, spun polyester, texturised nylon, polyester filament, acrylic, acrylic/wool blended, worsted and woollen and cotton coarse yarns. The major players in the spinning segment are Ramatex, CNLT (Far East), Penfibre and Hualon. Together, they represent 70% of the yarn manufactured.

There are 14 woven fabric producers as at 2003, with 11 of them producing woven fabrics for made-up apparels and household products and the balance are involved in producing woven fabrics for car seats and upholstery. As for knitting, there are 150 knitting mills that produce knitted fabrics, knitwear and knitted collars and cuffs. The number of machinery utilised are 2,395 knitting machines, with most being circular knitting machines. Ramatex is the biggest manufacturer and exporter of knitted fabrics in Malaysia, accounting for 15% of local production.

5 manufacturers produce non-woven fabrics for disposable diapers, apparel interlining, household and personal care products, and 2 are involved in manufacturing geotextile fabric for the industrial and engineering industry. Malaysia is 1 of 8 major non-woven textile producers in Asia that include China, Japan, Thailand, Taiwan, Indonesia, Philippines and South Korea. Currently, these countries represent 25% of the world’s non-woven fabrics production. 50% of Malaysia’s non-woven fabric production comes from Fibertex Nonwovens S/B, part of Fibertex Nonwoven A/S Denmark.

2.2 Apparel Sub-sector
There are more than 500 apparel manufacturers in the country, producing woven and knitted apparels and textile accessories such as zipper, buttons, thread, laces, etc. However, taking into consideration players that are not registered with MIDA, the number is more than a handful. Malaysian apparel manufacturers are mainly involved in contract manufacturing for the high-end apparel market, with some of them being well-known names such as Nike, Gap, Adidas, Puma and Christine Dior. In terms of sales value, Ramatex sits at the top with the highest apparel sales, followed by PCCS and Hytex. Apparel manufacturing, being labour intensive, provides the highest employment within the industry with 46,198 employees, representing more than 60% of the total workforce within the industry.

Table 1 shows the manufacturing activities of some listed companies within the industry.

Table 1: Activities of Major Players

3.0 Free Industrial Zones, Duties and Tariffs

3.1 Free Industrial Zones & Licensed Manufacturing Warehouse
Free Industrial Zones (FIZ) are areas specifically established for manufacturing companies that produce or assemble products mainly for exports, or also known as export-processing zones. Companies in FIZ are allowed duty free imports of raw materials, components, parts, machinery and equipment directly required in the manufacturing process. In areas where FIZ are not available, companies can set up Licensed Manufacturing Warehouses (LMW), which are accorded facilities similar to those enjoyed by establishments in FIZ. FIZ and LMW greatly benefit the textile and apparel industry because the pricing of local textile and apparel exports can be competitive in the world market, due to the elimination of duties.

3.2 Import Duties & Tariffs
Import duties imposed by Malaysia for textile and apparels range between 0% and 30%. Malaysia does not impose import licenses or labelling requirements for the import of textiles. No import tariffs are imposed on cotton and synthetic staple fibres. Cotton yarn imports attract 5% to 10% import duty, woven fabrics at 10%, knitted fabrics at 15% and apparels at 20%. However, for imports from the ASEAN Free Trade Area (AFTA), the import duties range from 0% to 5% for all of the above goods. In total, 21.8% of Malaysia’s textile products are at zero tariff rates, 76.3% range at 1% - 5% tariff rate, and the remaining at tariff rates higher than 5%.

4.0 Textile & Apparel Production in Malaysia
The apparel/apparel sub-sector recorded the highest ex-factory sales value within the textile and apparel industry, representing 38.17% or RM3.07 bln of the total ex-factory sales value in 2003, followed by synthetic textile mills (31.73% or RM2.55 bln), knitting (12.40% or RM1.0 bln), dyeing, bleaching, printing & finishing of yarns and fabrics other than batik (10.0% or RM0.8 bln), and lastly, natural fibres & spinning (7.69% or RM0.6 bln).

Figure 1: Sales Value (ex-factory) of Malaysia's Textile & Apparel Industry

Figure 1 shows the trend of sales in the textile and apparel industry. Although the ex-factory sales value of most sub-sectors show a declining trend since the peak at 2000, sales of the apparel factories and synthetic textile mills seem to be stabilising. The decline in sales of natural fibre spinning & weaving, dyeing and finishing, and knitting sub-sectors marks a shift from selling plain fabrics to higher value products such as finished apparel to capture and increase the value before marketing it.