With the removal of Multi-Fibre Agreement getting closer, many wonder if it will mark the end to the Malaysian textile and apparel industry, which have been perceived to be a sunset industry even before the 31 Dec 2004 deadline was approaching. The industry’s huge contribution to the Malaysian economy cannot simply be disregarded. This industry contributed RM9.3 bln to Malaysian exports, both in 1998 and 1999, RM10.3 bln in 2000, RM8.9 bln in 2001, RM8.4 bln in 2002 and RM7.8 bln in 2003. The industry employs over 65,000 workers. Therefore, what is at stake is the survival of one of Malaysia’s largest export earners and a big generator of jobs.
1.0 Understanding the Textiles & Apparel Industry
1.1 Production Process
The main raw material for the textile and apparel industry is fibres. Fibres come from 2 sources - natural or agriculture (such as cotton, wool, silk, etc) and chemical or man-made fibres. In contrast to natural fibres, the composition and structure of man-made fibres can be humanly shaped to make them useful for many different purposes and to suit specific needs - level of absorbency, strength, elasticity, heat or cold resistance. Man-made fibres are further categorized into 2 types, namely artificial or cellulosic fibres, which comes from naturally occurring cellulose sources such as trees (i.e. rayon, acetate, triacetate, and lyocell), and synthetic or non-cellulose fibres which are formed from petrochemical derivatives (i.e. nylon, polyester, acrylic, and other than the 4 cellulosic fibres). Unlike natural fibres, man-made fibres are not water absorbent (absorbs 0.4% of water compared with 7% by cotton under normal atmospheric condition), dry quickly, can retain body heat, and are relatively low price. Polyester is the dominant fibre among synthetic fibres, making up 58% of the world’s synthetic fibre production.
Spinning is the process incurred to transform fibres into yarns. There are two methods of spinning, namely ring spinning and open-end spinning. Ring spinning produces finer count yarns (ie for shirts) whereas open-end spinning produces coarse count yarns (ie for denim). Count is the measurement of the thickness of the yarn. Ring spinning process usually starts with mixing fibres of different grades to provide a uniform blend of fibre properties. After spinning, the yarns are tightly wound around bobbins or tubes.
Yarns are turned into fabrics generally through 2 different processes, namely weaving and knitting. Weaving, the oldest and most common method, produces fabrics by interlacing warp yarns (yarns aligned lengthways that requires a higher degree of twist for it needs to withstand more strain) and weft yarns (the filling yarns that are interlaced widthwise). The machines used for weaving are usually shuttle looms or shuttleless looms.
Knitting produces fabrics by using a series of needles to interlock loops of yarn. Therefore, only one set of yarn is used to produce a textile fabric. Interloping horizontal set of yarns (weft) produces weft knitted fabrics and interloping vertical sets of yarns (warp) produces warp knitted fabrics. The biggest difference between woven and knitted fabrics is that knitted fabrics have stretch (elongation) characteristic built into them, due to the interloping structure. Knitted fabrics also have a more open surface compared to woven fabrics; making knitted garments more comfortable to wear.
Fabrics produced after one of these processes are known as grey (greige) fabrics. Grey fabrics’ value is enhanced after it goes through dyeing, printing and finishing processes, which makes the fabrics more attractive. Dyeing adds colours to fabrics. Most dyeing is performed either by the finishing division of vertically integrated textile companies, or by specialty dye houses. Textiles are dyed using a wide range of dyestuffs, techniques and equipment. Dyestuffs used by the textile industry are largely synthetic. Two common dyeing methods are batch dyeing and continuous dyeing. The final process involves washing the dyed fabrics to remove unfixed dyes and chemicals.
Printing decorates the fabrics with patterns and designs and usually occurs after the fabrics had been dyed. 3 common printing methods include roller printing, flat screen-printing and rotary screen-printing.
After going through the dyeing and finishing process, fabrics are transformed into garments and apparels, in the forms of shirts, skirts, underwear, towels, sheets, pillowcase, bags, tents, etc after they are cut and sewed. Labour skills are very important at this stage as it determines the quality and standard of the made apparel and products.
Generally, spinning of yarns, fabric weaving and knitting, and dyeing and finishing of fabrics are considered as the primary textile sector whereas garment and apparel accessories making are considered as the secondary textile sector. From spinning to garment manufacturing, the processes become less capital-intensive and more labour and knowledge-intensive, while the scale of operations tends to decline significantly. Therefore, electricity and water forms a substantial cost in the upstream operations whereas labour cost represents the bulk of cost in the downstream operations. Man-made fibres’ industry is closer to the chemical sub-sector than to textile and apparel industry.
Other than woven and knitted fabrics, there is another type of fabric known as non-woven fabrics. Non-woven fabrics are the cheapest and involve the simplest fabric manufacturing technology. Non-woven fabrics are engineered to provide specific functions such as absorbency, liquid repellency, resilience, filtering, bacterial barrier and sterility. Among the non-woven textile products are diapers, feminine hygiene products, medical products, automotive fabrics, home textiles (ie curtains), geotextiles and protective apparels.
1.2 Global Trade of Textiles and Apparel
The world textile imports in 2001 amounted to US$150 bln whereas apparel imports recorded US$215 bln - see table 1 and figure 1. EU and US are the biggest textile importers in the world, accounting for approximately 11% (US$17 bln) and 10% (US$15 bln) respectively of the world’s total textile imports. China is the third largest textiles importer, importing up to US$13 bln worth of textiles.
Table 1: Major importers of textiles (SITC 65) (US$ bln)
As for apparels (see table 2), the EU, together with the US, represent 55% of the world’s apparel imports, followed by Japan, Hong Kong, and Canada. From 1997 to 2001, US’s apparel imports rose 32% to US$67 bln, reflecting a trend of apparel outsourcing to other countries.
Table 2: Major importers of apparels (SITC 84) (US$ bln)
On exports, the largest textile exporter in the world is the EU, with a value of US$50.54 bln in 2001, representing 34.4% of the world’s total. Though it may look impressive, its share had declined substantially. Its market share way back in 1990 was 63%. A major cause for this is the rise of China. With a share of 6.9% in 1990 valued at US$7.22 bln, China’s exports of textile have grown to US$16.83 bln by 2001, or 11.4% of the world market. Unlike the EU which produces high quality and specialty textile products, China is a major source of low-cost textile products. Table 3 below gives further details on the exports of apparels.
Table 3 : Selected world exporter of textiles (SITC 65) (US$ bln)
As for apparels, EU is also a major exporter with US$47.09 billion of intra-EU exports and US$15.8 billion of extra-EU exports as at 2001. China ranked second, recording a value of US$36.5 bln in 2001. In terms of percentage, China’s apparel exports represent 19% of the world’s exports, compared with 8.9% in 1990. Table 4 below gives further details on the exports of apparels.
Table 4 : Selected world exporter of apparels (SITC 84) (US$ bln)
In terms of percentage, Malaysia contributed 0.7% of the world’s textile exports and 1.0% of the world’s apparel exports in 2001, compared with 0.3% and 1.2% respectively in 1990. Both Indonesia and Thailand fared better than Malaysia, with 2.2% and 1.3% share in world textile exports and 2.3% and 1.8% share in world apparel exports respectively.