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Textile industry highly optimistic in 2008

25
Mar '08

2008 promises to be an eventful year by any standards for the Malaysian textile industry. The textile industry is faced with several challenges globally and locally.

Crude Oil Prices have remained high hovering above the 90's since the last quarter of 2007 and raw cotton prices are also around 70 cents /pound since the last 6 months as compared to a low of 50 cents/pound over a year ago.

This has happened despite downstream yarn and garment prices remaining unchanged during the whole period. This evidently points to an excess capacity situation in the textile industry all over the world.

The following scenario is expected to prevail during the course of the year affected by both international and local events:

1. Economy slowdown in the US economy which started off with the “subprime loan issues” in the US further lowering the textile demand.

2. China will integrate fully into the WTO system during 2008 and is expected to export more to the US.

3. Oil prices will remain high or increase even further due to the increasing demand for energy from China.

4. Fibre prices will remain high at this level at least until the new crop in August/September.

5. Reduction of foreign workers dependence as proposed by the government will increase production wages substantially.

6. Expected fuel price increase locally after the general election in March will trigger a corresponding increase in transportation rates.

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