The timber industry has been a catalyst of Malaysia’s economic growth for centuries.A standout of the agricommodity sector, wood and wood-based industries contribute significantly and consistently to the nation’s exports, employment and GDP. And the Malaysian Timber Council (MTC) has been key to this growth. In line with its vision to develop the timber industry into a world leader in the manufacture and trade of timber products, MTC aspires to usher the timber industry into a new era of sustainability and competitiveness.
Timber is the third largest commodity industry after palm oil and rubber in Malaysia. In 2020, its export value stood at RM22.02 billion – a modest decrease of 2.1 percent compared to 2019 which can be attributed to the economic downturn during the pandemic. This accounts for 14 percent of Malaysia’s agricommodity exports, 2.2 percent of total exports and makes up1.6 percent of the country’s GDP.
Industry 4.0 has elevated the agricommodity industry to the next level. Products are being produced sustainably, using cutting-edge technology and integrating innovative designs. To ensure that the timber industry remains relevant in this environment, MTC seeks to drive digitalisation and enhance competencies within the industry. Muhtar Suhaili, CEO of MTC speaks to International Business Review about MTC’s plans to transform the timber industry into knowledge-based and high value-added industry.
A Roadmap to the Future
MTC was established in 1992 as a company limited by guarantee under the purview of the Ministry of Plantation Industries and Commodities (MPIC). The Council is mandated to promote the development and growth of the timber industry in Malaysiaand market Malaysian timber products globally.
The Council’s aspirations are outlined in a five-year plan referred to as the MTC Roadmap 2019 – 2023. It consists of four key thrusts which include Industry Development and Empowerment, Market Intelligence, Market Development and Stakeholder Management. These are accompanied by 14 Focus Areas.
“It is our long-term goal to fundamentally transform the timber industry in Malaysia through the 14 Focus Areas,” Muhtar highlights. These Focus Areas are designed to address the challenges faced by the timber industry which are further exacerbated by the COVID-19 pandemic, concerning issues such as digitalisation, sustainability of raw materials and manpower.
“The timber industry needs to transform its business operations to one that focuses on digitalisation, technology, innovation and branding to maintain its position in the nation’s economy,” he highlights.This is in line with the National Agricommodity Policy (NACP) 2021 – 2030 which aims to make the agricommodity sector of Malaysia more competitive, sustainable and market-driven.To achieve the objectives of the 14 Focus Areas, MTC has formed Working Groups focused on certain material issues.
Accelerating Growth across Multiple Frontiers
The Raw Material Augmentation Working Group (RMWG) was formed to ensure the continuity of raw materials supply. During the Rio Earth Summit 1992, Malaysia pledged to keep at least 50 percent of its land under forest cover. The industry therefore needs to reduce its reliance onvirgin forests and search for alternative sources for its raw materials. “RMWG is exploring other fast-growing species that can be harvested within three to four years,” Muhtar explains.
One solution is by importing raw materials and strengthening midstream processes. MTC established the Import Assistance Programme (IAP) to encourage timber companies, especially SMEs, to import raw materials and develop high value-added products. A Task Force on Import Facilitation of Sawntimber and Logs into Malaysia was also formed to increase raw materials supply in the country.
Another threat faced by the industry is the lack of competency and knowledge among local workers necessary for the adoption of automation and technology. “Nurturing the pool of knowledge talent, especially on engineering and manufacturing processes is crucial to strengthening the industry’s capabilities,” Muhtar expounds.
The Working Group on Manpower (MWG) is tasked with developing knowledge talent and reducing dependency on unskilled foreign workers. He shares that the timber industry employs 140,000 workers, of which only 45 percent or 63,000 consists of locals. Furthermore, the Council recently launched its Engineer Placement and Internship in Industry Programme (EPIP) designed to attract engineering undergraduates into the industry.
MTC assists companies in its automation journey via initiatives such as the Financial Incentive for Purchase of Machinery (FIPM) and Smart Manufacturing Consulting. “We strive to transform companies from the analogue to digital era, and from a manual and labour-intensive industry to one focused on automation and mechanisation,” Muhtar states.These efforts will help enhance productivity and enable the development of innovative products.
The Heart of the Organisation
Muhtar believes people are enablers of MTC’s success. Coming on board as CEO in November 2020, his first priority was to transform the Council into a people-centric organisation. He did so by introducing an open-door policy to encourage discussions and the exchange of ideas. “In MTC, people are our greatest assets,” he states. “And the management and I have the responsibility to provide direction, motivate and inspire them.”
It is also important for Muhtar for MTC to embed a culture of honesty, integrity and respect for others. Aside from introducing an integrity pledge that was signed by all staff, MTC will also form an Integrity and Governance Unit for the implementation of anti-bribery and anti-corruption practices within operations.
MTC is actively developing their talent through the provision of training in technical and soft skills. This, alongside a performance-driven and performance-based culture works towards nurturing the right skills, attitude and mindset within the Council’s workforce.
In 2021, MTC is also focusing its efforts in supporting business succession programmes, enhancing market access, championing design and branding programmes, driving green initiatives as well as strengthening relationships with all its stakeholders.
The Council ensured that efforts to promote timber and timber-based products are not halted during the pandemic. Throughout this period, MTC held various virtual dialogues with their international counterparts namely in New Zealand, Qatar, India, Dubai, Peru, Russia and Bangladesh.
Changing the perception that the timber industry is a 3D industry – dirty, dangerous and demeaning – is also integral to MTC’s efforts to boost trade for timber-based companies as well as to attract talent to join the industry.
“The timber industry is sustainably managed, so are our forest management,” Muhtar explains. He further highlights that this is key to maintaining forest resources, ensuring the continuity of raw materials and exports and the economic viability of the industry in the long-run.
As an export-oriented industry, wood-based industries in Malaysia have also been impacted by the COVID-19 pandemic and the Movement Control Order (MCO). MTC aims to continue supporting companies that are struggling to ensure that they are able to bounce back in a post-pandemic environment.
Muhtar believes a bright future awaits the timber industry, thus it is important that MTC plays its part in the industry’s transformative journey towards digitalisation and sustainability. With MTC’s main objectives being to ensure that the timber industry achieves its export target of RM27 billion by 2030 as stipulated in the NACP 2021 – 2030, the Council is bringing all hands on deck to augment the growth of the industry in the interest of the nation’s socio-economic growth, now and for generations to come.