Shoe manufacturers unable to meet export demand, plead for reopening

The uncertainty on when operations can resume has deeply impacted the industry’s cashflows

by NUR HANANI AZMAN / pic by MUHD AMIN NAHARUL

THE Malaysian Footwear Manufacturers Association (MFMA) president Rachel Foo said shoe manufacturers are unable to deliver and commit to their export orders due to the government’s policy which only allows them to operate in Phase 3 of the National Recovery Plan (NRP).

This does not only hamper demand from foreign markets on Malaysian sandals, it also bleeds the industry’s cashflows, as they can only depend on e-commerce and department stores’ sales.

“Many shoe retailers are burdened with debts owing to shopping malls and salaries to employees when there is zero productivity in the retail sector” Foo said, adding that 30% of MFMA members have closed down since last year during the first Movement Control Order (MCO).

If such a lockdown continues, another 20% to 30% will exit business, she said.

“Once we have lost the order to neighbouring countries, it will be very difficult for us to win back the order. Therefore, our industry is facing the difficulties that we may be losing more export orders in the coming years.

“The most difficult part for shoe manufacturers is that it is very difficult for us to maintain our skilful workers if there is no consistent order. Once we have lost them, it takes years to train these skilful workers again,” she added.

Foo said the essential and non-essential classification has proven to be not practical to the economy because everything is related in the eco-system.

“The focus should be public health and economy. Public health by vaccination is being carried out extensively and for the economy, the government should have a great plan to guide us into the recovery stage instead of continuous lockdown status,” she said.

Meanwhile, the Federation of Malaysian Manufacturers (FMM) Datuk Soh Thian Lai said the government should immediately allow all non-essential sectors to resume operations at 50% workforce capacity or higher if they have achieved higher levels of vaccination in the company.

He said from FMM’s survey, the non-essential sector sales are severely impacted and the businesses are immensely constrained in their cashflow given that orders, both pending and future orders, are interrupted with no certainty on when operations will be allowed to resume.

“On the other hand, suppliers are expecting to be paid on time, wages to employees have to be paid in full even if no actual work was performed, utilities and rental payments are due, logistics cost has increased due to cancellation or postponement of shipments and/or cargo stuck at ports, penalties imposed on delay of delivery, among others,” Soh said.

“This has put most businesses in the non-essential sectors in an extremely precarious situation with the risk of collapse resulting in high unemployment if restrictions on business operations continue indefinitely. There is also fear that if they are not allowed to open up operations immediately, many will not be around to help rebuild the economy once businesses are allowed to open,” he said in a statement on Tuesday.

Malaysian Employers Federation (MEF) also expressed a similar request to ensure the survivability of these non-essential sectors.

President Datuk Syed Hussain Syed Husman said the prolonged MCOs that have “remained enforced since March 2020 continue to devastate businesses and employment”.

“Besides the fashion, textile and apparels industry, many other non-essential industrial sectors have been devastated by the lockdowns, including the retail, tourism and hotel, and services sectors.

“We fear that the situation will worsen if these non-essential sectors are forced to remain closed during Phase 1 and Phase 2 of the NRP and we urge the government to urgently review the NRP threshold set by National Security Council to accelerate the NRP to Phase 3 and 4 without delay,” he said in a statement.