THE furniture industry fears that rising labour expenses are increasingly threatening long-term export growth and business sustainability, particularly for factories reliant on foreign workers.
Sarawak Furniture Industry Association (SFIA) president Leo Chiang Kok Sze said the sector reflected the wider challenges faced by labour-intensive industries that still relied heavily on factory workers and skilled technical manpower.
He said the industry was commonly regarded as a 3D sector — dirty, difficult and dangerous work — making it difficult to attract local workers.
“Most locals are generally not interested in working in this sector, especially in factory production roles.
“In addition, skilled local carpenters and technical workers are increasingly difficult to hire.
“As a result, many furniture factories are currently facing serious manpower shortages and remain heavily dependent on foreign workers to sustain daily operations and production output,” he told Sarawak Tribune.
The issue has come into sharper focus following industry concerns over the Foreign Worker Transformation Approach (FWTA), including the RM1,854 fee under the system and proposed increases in foreign worker renewal fees.
The renewal fee is expected to increase from RM904 to RM1,484 from June 1, 2026, before rising again to RM1,854 from Jan 1, 2027.
Higher cost base in East Malaysia
Chiang said manufacturers in East Malaysia were already operating with higher production costs than their counterparts in West Malaysia even before the FWTA was introduced.
“Even before the implementation of FWTA, production costs in East Malaysia were already higher compared to West Malaysia due to logistics, transportation and supply chain related challenges.
“The proposed increase in foreign worker renewal fees would place additional financial pressure on manufacturers who are already struggling with rising operating costs.
“For many furniture makers, this could become the final nail in the coffin for Sarawak’s long-term furniture export ambitions,” he said.
Thin margins raising sustainability concerns
Chiang said furniture manufacturers had already been dealing with rising production costs over the past few years, including inflationary pressures, higher transport and raw material costs, SST implementation, e-invoicing compliance and additional regulatory expenses.
He said most manufacturers were operating on extremely thin margins.
“The existing FWTA costs are already a heavy burden to the industry, and any further increase would inevitably affect overall business sustainability.
“As a result, passing some of these additional costs to end users is unavoidable, and this may eventually impact product pricing, competitiveness, and order fulfilment capabilities,” he said.
Export competitiveness under pressure
Chiang said that higher labourrelated costs could further weaken Sarawak’s position in the global furniture market, especially as the state remained behind West Malaysia in industry development and export readiness.
“Sarawak’s furniture manufacturing industry is already significantly behind West Malaysia in terms of scale, ecosystem development, supply chain maturity, and export readiness, by at least 15 to 20 years.
“Additional labourrelated costs will further weaken the competitiveness of Sarawak-made furniture in the international market.
“Many local manufacturers may eventually have no choice but to scale back export ambitions and focus primarily on the domestic market in order to survive,” he said.
SMEs more vulnerable
Chiang said smaller manufacturers were especially exposed to sudden increases in labour-related expenses because many operated with limited cash flow and lower margins.
“Small and medium-sized furniture manufacturers are far more vulnerable compared to larger companies.
“Any sudden increase in labour-related expenses can significantly affect their ability to maintain operations, retain workers, and remain competitive.
“Some may even be forced to reduce production capacity or cease operations entirely if the cost burden becomes unsustainable,” he said.
Calls for policy support
Chiang urged policymakers to review the proposed increase in foreign worker renewal fees and introduce more targeted support measures for labour-intensive sectors.
“Targeted incentives or rebates should also be introduced for labour-intensive industries such as furniture manufacturing.”
He said compliance procedures should also be simplified, while administrative burdens linked to labour regulations should be reduced.
He added that automation grants and incentives could help manufacturers gradually reduce dependence on manual labour.
“The furniture industry remains an important contributor to Sarawak’s economy, employment, and downstream timber sector.
“Continuous support and practical policy considerations are essential to ensure the longterm survival and growth of local manufacturers,” he said.
