MALAYSIAN Knitting Manufacturers' Association vice-president Tan Teng San believes there is still hope for the Batu Pahat textile and garment industry despite the gloomy outlook.

At its height in 1998, the association represented the interests of 1,500 factories, many of whom were based in Batu Pahat. These ranged from high-end spinning factories to downstream apparel manufacturers.

At the time, the industry was the third-largest foreign exchange earner for the country. But last year, it slipped to the sixth position, with exports totalling RM9.7 billion.

The problem, according to Tan, are cheap imports from low-cost production centres such as China, Vietnam, Cambodia, Bangladesh and even Africa.

"Back in the 1970s, we could make a clean profit of RM10 from each shirt. Today, we count ourselves lucky if can make RM5. But at least, we are still in business. And that is the good news," he said.

Tan said it was still possible for local manufacturers to beat the competition because of Malaysia's strong reputation in world markets for production quality, on-time delivery and skilled workforce.

"We should focus on middle- to high-end markets," he said, adding that now was the time to go for niche products like medical fabrics like "quick dry microfibre", "anti- bacterial" materials and "flame retardant" pillow cases.

"All these products can be sourced locally. Buyers from the US and Europe are eager to place orders with us. The prospects for the industry are still good," he said.

He said while it is true that low-end garment manufacturers locally were going through a tough time, many were also shifting to high-end markets to stay afloat.

Last year, according to the Malaysian Industrial Development Authority, there were 36 such new investments, of which 19 projects were expansions or diversification involving a total capital outlay of RM330.6 million.

But Tan said the switch to high-end products was capital-intensive and loan facilities were hard to come by.

"It's not easy to get a bank loan, even if you have the expertise and technical know-how. This really is the problem. The banks are not supporting us," he said.

According to Cheong Kwok Wah — general manager of Berjaya Soutex Sdn Bhd— Batu Pahat's first textile spinning factory — it costs between RM50 million and RM100 million to start a new plant.

Soutex is the main yarn supplier to domestic manufacturers.

"I fear the Batu Pahat textile and garment industry is heading for bad times. The business outlook is very worrying," he said.

Gene Tay, assistant managing director of Kah Wha Sdn Bhd, concurs, adding that without help from the banking and financial sectors, it was impossible to stay afloat for long.

Tay said the industry could also use more support from the Government, particularly in helping spur the Malaysian textile companies to expand further and venture into overseas markets.

Btimes.com.my