Malaysia's Textile and Garment Firms at the Crossroads

Abstract

This paper discusses the development of the textile and garment industry in Malaysia, and its sustainability through an assessment of trade balance and trends and changes in technology. Foreign textile and garment firms were identified by the Malaysian government as some of the key import-substituting and, later, export-orientated industries for promotion. The industry expanded strongly to become a major contributor to manufacturing employment, value-added and exports over the period 1968-97. Rising material and labour costs, and increasing competition following the termination of the Multi-Fibre Arrangement quotas, quickened the absorption of automation and other advanced process technologies in manufacturing from the 1990s. However, the lack of co-ordination in government policies to stimulate the co-evolution of critical complementary industries, such as advanced materials and cutting-edge machinery and equipment, in addition to imports of foreign unskilled labour, has restricted the shift towards high-end operations. Hence, employment, exports and value-added of the textile and garment industry has contracted since 2000.

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