Industrialising Malaysia: Policy, Performance, Prospects

By Jomo K. S. | Go to book overview

NOTES
1
The term ‘textile industry’ is used here in the broad sense, to include the whole range of sectors from fibre production through spinning and weaving to the production of finished apparel. Normally, for economy’s sake, this convention will be followed throughout the paper. While in some cases we refer to the textile sector in the narrower sense - i.e. spinning of yarn and weaving of cloth - it should be clear from the context which usage is intended. Normally we employ the term ‘primary textiles’ when we intend this narrower usage. The terms ‘apparel’, ‘clothing’ and ‘garments’ are used interchangeably to refer to the sector which produces made-up wearing apparel.
2
Singapore did not rely as heavily as did the other ‘little dragons’ on textiles and garments to fuel its early manufactured export growth. It should also be mentioned that, while textiles and garments contributed significantly to output, export and employment growth in the other Asian NIEs, there is some controversy over how important the industry was in generating the managerial skills and technological capabilities required for rapid industrialisation. Amsden argues (1989: Ch.10), for example, that textiles played virtually no role as a base from which the Korean chaebol diversified into more skill- and capital-intensive industries.
3
By way of comparison, in 1988 Thailand’s textile and garment exports were more than twice as large as Malaysia’s; Indonesia’s were about one-fourth larger. Annex Tables 9A.1-9A.5 contain textile trade data for several of Malaysia’s East and Southeast Asian neighbours. They are based on Tables 5. A-5. E of O’Connor (1989a).
4
Malaysia still has unutilised quotas in several ‘sensitive’ categories: for example, in four out of six quota-restricted items in the European Community (EC) market, quota utilisation ranged from 75 to 83 per cent in 1988; in the case of the remaining two, utilisation was between 36 and 51 per cent (Zainal Abidin Sulong, chairman of MIDA (1989)).
5
A glance at Table 9.4 shows that the wage differential between Malaysia and Korea in the primary textile sector had widened considerably by 1990, to the point where Malaysian hourly labour costs were only about 27 per cent of Korea’s. While evidence for the textile sector alone is not available, the overall increase in Korean wages in the last few years has outstripped increases in labour productivity, with the result that unit labour costs in manufacturing have risen steeply. According to one calculation, the increase from mid-1988 to mid-1989 was 43 per cent (Financial Times, Special Supplement on South Korea, 16 May 1990, III).
6
For example, in 1983, ring spindle technology could spin 28 metres of short staple yarn per minute, whereas open-end rotor technology could spin 98 metres per minute (Werner International, 1988). Spinning speed may not be the only performance variable affecting the choice of technique, however. One advantage of the older ring spinning technology is that it allows a greater degree of flexibility with respect to choice of product lines. Open-end rotor spinning is best suited to the coarse count yarns such as those used in weaving denim textiles (Beasley, 1989).
7
In 1987, US garment imports from Malaysia, valued at US$343 million, accounted for 53 per cent of all OECD imports (OECD, 1989).
8
According to the estimate of William Cline of the Institute for International Economics, in Washington, DC, quotas must be allowed to grow by 7 per cent a year if protection is not to tighten with the growth in the US market.
9
Rawsthorn (1990); see also, Financial Times, 14 June 1990, and Far Eastern Economic Review, 16 August 1990. It is not surprising, under the circumstances, that the EC should oppose the North American proposal.

-267-

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