This article first appeared in The Edge Malaysia Weekly on March 23, 2026 - March 29, 2026

MALAYSIA’s furniture industry, having weathered Covid-19 disruptions, is now facing severe structural pressures, with industry players flagging a triple squeeze: rising labour costs; volatile export demand; and intensifying regional competition.

While the government has set an ambitious target of raising timber and timber product exports to RM32 billion by 2030, manufacturers at the Malaysian International Furniture Fair (MIFF) 2026 warned that this goal is achievable only if policymakers address the “ground realities” of a challenging operating environment.

“Between fierce overseas competition and mounting domestic burdens, the industry is under immense pressure,” Muar Furniture Association president Steve Ong tells The Edge. The MFA represents more than 700 member companies.

Furniture makers are struggling with shifting domestic policies — particularly labour and tax regulations — which added layers of operational complexity, the association notes.

At the same time, regional competitors in countries such as Vietnam and China benefit from superior cost structures and economies of scale, further eroding Malaysian players’ profit margins.

The challenges come as Malaysia’s furniture export growth has remained largely stagnant in recent years. Total furniture exports slipped to RM12.53 billion in 2025, from RM12.83 billion in 2024 and from the peak of RM13.86 billion in 2022.

The export figures cover exports of wooden, metal and plastic furniture, seats and their parts, as well as furniture made from other materials. This, in turn, contrasts with Malaysia’s broader trade trajectory. The country’s overall exports exceeded RM1 trillion for the fifth consecutive year in 2025, rising 6.5% to a record RM1.61 trillion from RM1.51 trillion in 2024.

“In today’s competitive global market, [furniture] manufacturers need to focus on enhancing the value of their products — through better design, innovation, branding and efficiency improvements — rather than competing solely on price,” MIFF general manager Kelie Lim tells The Edge.

By strengthening product differentiation and brand value, she adds, Malaysian companies will be better positioned to command stronger pricing in international markets.

The industry’s primary challenge is, however, the rapid rise in overheads.

Malaysia’s minimum wage has risen in stages from RM1,200 to RM1,500 and, most recently, to RM1,700. Employers must also contend with a new 2% Employees Provident Fund (EPF) contribution for foreign workers, along with higher electricity tariffs.

The furniture sector is a cornerstone of Malaysian manufacturing, contributing billions of ringgit in foreign exchange annually and supporting thousands of jobs, particularly in Johor’s Muar district, which is known as Malaysia’s “Furniture City”.

The district is home to around 800 factories that collectively account for 55% to 60% of Malaysia’s furniture exports, according to the MFA. Muar-based manufacturers ship 7,000 to 8,000 containers of furniture products each month to markets worldwide.

Over decades, the industry has evolved from small cottage workshops into integrated manufacturing clusters in industrial estates in Pagoh, Bukit Pasir, Bukit Bakri, Parit Jamil, Tanjong Agas and Geresik — all near Muar — supported by a network of subcontractors and component suppliers.

“Most factories are facing the same problem: The global economy is down while our labour costs have increased,” says Vicent Ang, a third-generation family member who runs Furniture Industries Sdn Bhd, which operates under the You Home Furniture brand in Muar.

According to Ang, the company produces about 30 containers of dining furniture monthly. Roughly 80% of its workforce comprises foreign workers.

The pressure is equally felt by larger players.

HeveaPac Sdn Bhd, which employs nearly 2,000 workers and exports to 72 countries — accounting for 98% of its revenue — is feeling the pinch of the new mandates. The company is the ready-to-assemble (RTA) unit of Bursa Malaysia-listed Heveaboard Bhd (KL:HEVEA).

HeveaPac founder and executive director Peh Ju Chai estimates that the minimum wage hikes alone add nearly RM10 million annually to the group’s payroll. The 2% EPF contribution for foreign workers adds another RM60,000 to RM80,000 per month.

“The global market is softening, and furniture is not a necessity like food,” Peh says. “Competition is fierce; prices are dropping while costs are increasing.”

Consumers’ buying pattern has also changed, Peh notes. Previously, HeveaPac shipped massive volumes to US retail giants such as Walmart, Kmart and Target. Today, orders are far smaller and more fragmented, driven by the rise of e-commerce over traditional big-box retail.

“Before, we could ship 200,000 pieces of a single item. Now, 120 pieces is considered big,” he says. This shift has forced manufacturers to move away from mass production towards more complex, customised batch production.

The industry and HeveaPac’s struggles are reflected in Heveaboard’s financial performance: It was loss-making in four of the last six years. Meanwhile, its market capitalisation has shrunk from RM410 million in May 2021 to RM79.2 million last Tuesday.

HeveaPac, or the RTA business, contributed to the bulk of Heveaboard’s revenue in its financial year ended Dec 31, 2024.

Smaller firms such as JT Home Furniture face even tighter margins. Its director J Tee notes that while furniture players benefited briefly from a surge in online orders, demand has since tapered off, leaving them vulnerable to price wars with Vietnam and China — countries that are perceived to have stronger state-backed industry support.

Despite frequent calls from the government to automate and reduce labour dependency, industry leaders caution that the transition is neither simple nor viable for such a labour-intensive craft as furniture-making.

“I’ve scouted for robots globally, including from German companies, but their productivity is much lower than our current manual processes,” says Peh, who spent years exploring automation by visiting machinery makers in countries such as China, Japan, South Korea, Italy and Poland.

“If I invest in those robots, my costs go up while my output drops,” he adds.

Alvin Kam, marketing director of Wansern Foam Industry Sdn Bhd, agrees that automation has its limits. Founded in 1994, Wansern produces foam and mattresses under the Honey and Natura brands. It also undertakes original equipment manufacturing for the export market, including to Japan and India.

The company has invested in R&D to make products that highlight Malaysian cultural elements, including batik-inspired design patterns that require hand-crafted detailing.

Kam says such features help differentiate Malaysian products from mass-produced imports, particularly as lower-priced furniture from China increasingly enters regional markets.

“Some processes can be fully automated, but some techniques still require a human touch. Not everything can be automated,” he explains. “Design elements like batik patterns need craftsmanship — and that helps distinguish Malaysian products from others.”

Kam adds that margins in the industry remain thin because manufacturers typically sell through distributors and dealers. “Sometimes, we have no choice but to pass cost increases to customers.”

A recurring theme among exporters is the growing risk of the US market. Once a primary destination, the US has become difficult to navigate, owing to price competition from China and anti-dumping duties of more than 40% on certain Malaysian furniture products.

Although the US remains Malaysia’s largest export market for furniture, shipments declined 19.7% from RM7.66 billion in 2020 to RM6.15 billion in 2025. At the same time, other markets also show mixed trends.

Kam notes that the threat of renewed tariff measures and shifting US trade policies have further discouraged expansion into the market.

HeveaPac, which once derived 95% of its revenue from the US, is pivoting instead towards Japan, whose export market has trended lower in recent years, easing from RM760 million in 2022 to RM580 million in 2025.

“Japan is known to be the toughest market in terms of quality. It can take 18 months just to finalise a decision, and they’ll ask you to change samples many times,” says HeveaPac’s Peh. “But we’ve made our price competitive — not necessarily the cheapest, but competitive in terms of quality, service and partnership.”

This shift was also noted by MIFF’s Lim, who observes that global buyers are increasingly prioritising design differentiation, sustainability and supply chain reliability when selecting suppliers.

“Malaysian manufacturers have a strong entrepreneurial spirit. They are increasingly aware of these expectations and are adapting — for example, by investing in R&D, improving production processes and introducing new designs,” she says.

MIFF is one of Asia’s largest furniture trade exhibitions, attracting international buyers from more than 140 countries each year. In the 2026 edition of the fair, held in Kuala Lumpur in February, about 65% of exhibitors were Malaysian companies, with the rest coming from across Asia and other regions. 

Save by subscribing to us for your print and/or digital copy.

P/S: The Edge is also available on Apple's App Store and Android's Google Play.