This could be the beginning of the end for furniture industry’s super profits

IT will no longer be all smooth sailing for furniture makers, after a good run in the last three years that resulted from a weaker ringgit.

For one thing, customers would have been knocking on their doors asking for discounts following the ringgit rout.

For another, the movement of the ringgit is so uncertain - how far more will it weaken or is it normalising? Then there is also the issue of higher input prices.

The ringgit, which has been trading at 19-year lows, is expected to rebound, according to analysts and bankers, especially with Bank Negara’s measures that require companies to convert at least 75% of export proceeds into the local currency.

The ringgit has weakened more than 50% since August 2013, trading at the 4.4 to 4.48 range in 2017. It is one of the worst performing currencies in South-East Asia. As long as the ringgit remains weak, exporters continue to gain from good profit margins.

But that would not last that long, as some customers would be asking for discounts due to the weak ringgit.

Nonetheless, the ringgit’s weakness does not necessarily translate to higher furniture exports. According to data from Malaysian Timber Industrial Board, from January to October 2016, Malaysia exported RM5.7bil of wooden furniture products, compared to RM5.95bil and RM5.23bil in the same period in 2015 and 2014, respectively.