Malaysia
Drivers of GDP growth in 2024
Malaysia’s GDP growth is expected to improve to 4.7 percent in 2024 supported by a recovery in external trade and sustained growth in domestic demand.
Positive job market conditions, income growth and continued recovery in the tourism sector would also support the economy. Inflation is forecast to be above three percent next year being moderated by fuel subsidies.
A recovery in China and supportive global commodity prices are expected to boost Malaysia’s export earnings in 2024. The domestic economy is expected to be anchored by continuous steady consumer spending, busier tourism-related activities and investment in infrastructure.
Support for more investment in biomass sector
The Plantation and Commodities Minister, Fadillah Yusof, recently launched the National Biomass Action Plan 2023-2030 (NBAP2030) to support increased investments in the biomass industry aimed at creating around 3,000 jobs.
The Action Plan was developed based on the National Agro-commodity Policy (NAP) 2021-2030 and is aimed at boosting the biomass sector.
The Action Plan also calls for establishing biomass hubs to carry out centralised and systematic collection of biomass raw materials to drive the national biomass supply chain systematically and efficiently.
New scheme to raise wages
The government is introducing a programme to raise wages for more than one million low-income workers as the country grapples with rising living costs and growing inequality.
The scheme, which targets the small and midsize businesses that account for the vast majority of Malaysia's workforce, will be implemented in stages and is meant to complement the existing minimum wage policy.
Chairman of STA speaks on challenges in timber supply chains
At Global Legal & Sustainability Timber Forum 2023 held in Macau, a presentation was made by Henry Lau, Chairman of the Sarawak Timber Association (STA) addressing ‘Challenges and difficulties on international cooperation in timber supply chains’. He listed the following concerns:
a) Timber players labelled as culprits.
“Timber industry players are frequently labelled, described and perceived as culprits solely driven by economic gain and often neglecting broader concerns. In reality, when illegal activities take place there is a tendency to assume that operators from timber industry are involved prioritising economic gain over the wellbeing of forests and the environment”.
b) Where can responsible timber players find help?
“For those who are committed to carrying out their timber activities with an emphasis on delivering economic values while equally maintaining social and environmental well-being and good governance where can they find help and assistance? In fact, many view the cessation of forest harvesting for economic gain as absurd saying failing to realise that if the forests have no economic value they are vulnerable to conversion for other uses”.
c) Uncertainties in tenure security.
“Apart from being consistently placed in the front line by almost everyone else timber players are also facing uncertainties in tenure security. Timber players require long and secure tenure to implement sustainable forest management in line with the 17 Sustainable Development Goals (SDG) of the United Nations.”
However, Lau asserted that most of the timber players throughout Malaysia and Sarawak in particular, are facing insecurity of tenure.
What is the effect of these uncertainties? It was proposed that all stakeholders should incorporate this issue and remove this constraint to achieve economic, social and environmental goals”.
d) Complexities and disparities in consumer country legislation.
“Another challenge faced is that of ensuring compliance with various timber legislation enforced by consumer countries as well as gaining market recognition for the efforts undertaken by producing countries. The timber legislation can be highly complex and differs significantly from one country to another. Inconsistent definitions, regulations and requirements can create trade barriers and confusion in international cooperation efforts”.
e) EUDR.
“This regulation poses a significant challenge for tropical timber-producing countries because they still need to develop their economies. This situation could lead to a vicious cycle where market share is lost, producers experience reduced incomes potentially increasing poverty which in turn may contribute to an increase in deforestation through forest clearing as a means of survival”.
f) Timber products a more sustainable material.
“The rise of alternative materials like plastics, steel, aluminium, composites and engineered wood products has made them an increasingly popular choice for consumers. This poses a threat to the timber industry as it could reduce the demand for wood products. More efforts are required to promote the utilisation of wood as a sustainable materials in alignment with the concept of a circular bio-economy”.
Understanding forest ecosystem functions to promote SFM
The Sarawak Forest Department and the National Institute for Environmental Studies (NIES) in Japan have signed a memorandum of understanding on collaboration in research activities for sustainable forest management.
The focus will be on developing an effective methodology for the evaluation and implementation of essential forest ecosystem functions and services to promote SFM and conservation as outlined in the global biodiversity frameworks under United Nations.
Other areas of cooperation covered under the MoU include collaboration in forest ecosystem and biodiversity conservation, establishing a standard research methodology for Permanent Sample Plot networks and joint publication of findings together with workshops, conferences and training.
Effectiveness of certification policing questioned
A recent report claims there are weaknesses in the Malaysian Timber Certification Scheme (MTCS) which, the report says, casts doubt on the effectiveness of the Malaysian Timber Certification Council (MTCC) and the PEFC in guaranteeing standards and enforcing compliance.
It is claimed in the report that SIRIM, the accrediting and auditing body, does not have a clear limit on how many issues of non-compliance lead to suspension or revocation of certificates.
The Report says “We know that the government of Sarawak is making real and concerted efforts to protect their forests. But the way that MTCS is currently functioning simply cannot guarantee any of the standards they claim to uphold, says the report. The system needs to be reformed.” The report lays out 15 key recommendations for improving the system with a focus on reforming the grievance procedures.
Auditor-General’s report highlights forest management issues
According to the 2022 Auditor-General’s Report the country’s forestry sector contributed RM6.601 billion to GDP or 0.4 percent of GDP and exports by the timber industry contributed a total of RM22.744 billion in 2021.
The report says “Overall, based on the scope of the audit, forest management in Malaysia has been done sustainably to provide socio-economic benefits and maintain environmental sustainability. However, based on audit samples reviewed in nine states there were cases where the weakness in forest management in development of forest plantations, logging, mining and quarry activities within the Permanent Forest Reserve (HSK) had “posed a negative impact on the environment.”
To ensure that the objective of Sustainable Forest Management is achieved the report recommends that the Ministry of Natural Resources, Environment and Climate Change (NRECC), the Forestry Department of Peninsular Malaysia and the Forest Departments in Sarawak and Sabah create a database on the area of the permanent forest reserve, protected areas and forest land.
Wood product exports decline
The value of Malaysia’s exports of wood products dropped 19 percent year-on-year to RM14 billion between January and August this year compared to RM17.3 billion in the same period last year.
The Malaysian Timber Industry Board (MTIB) chairman said this was not a surprise as there has been a weakening in global demand.
Despite the slow sales this year he said he is confident that the timber industry can reach the export target of RM28 billion and domestic sales of RM20 billion by 2025 in line with the National Agri-commodity Policy 2021-2030 supported by the National Timber Industry Strategic Plan 2021-2025.
According to him, the domestic market accounts for as much as 60 percent of the country’s timber sector’s sales adding that this year Malaysia ranks 14th globally among wooden furniture-producing countries.
Indonesia
Healthy domestic economy to spur greater plywood consumption
The Indonesian Wood Panel Association (Apkindo) believes that 2024 will see a favourable domestic market situation that will further drive demand for plywood.
This message was from Bambang Soepijanto after being re-elected as the General Chair of Apkindo for the 2023-2028 term at the 9th Apkindo National Conference.
In his message he highlighted the domestic market opportunities saying the latest data shows that investment in various sectors grew to IDR1,207 trillion which will drive up domestic demand for plywood.
In addition to private investment the central and regional authorities will invest in the development of the Indonesian Capital City (IKN) and this is expected to boost demand for plywood.
Earlier, Bambang mentioned that the national plywood industry has been impacted by significant challenges such as the Covid-19 pandemic, a sharp rise in shipping costs, the US-China trade dispute, and the Russia-Ukraine war which triggered a global economic downturn.
However, despite headwinds, the plywood industry has survived in the face of the downturn in exports which was first observed from the second half of 2022.
In related news, at opening of the 9th National Conference of the Indonesian Wood Panel Association the Minister of Environment and Forestry, Siti Nurbaya, conveyed a message that the wood panel industry should not be overly concerned on the EUDR as the regulation acknowledges the Indonesian SVLK for wood products as indicated in paragraph 81 of the EUDR where wood products are required to meet eight criteria. However, it will be necessary to provide geo-location coordinates.
COP28 commitment to achieving NZE target sooner than 2060
President Joko Widodo reiterated Indonesia's firm commitment to achieve the net-zero emissions (NZE) target sooner than 2060 for the sake of realising an inclusive economy and emerging as a prosperous and sustainable country.
According to a press statement the president made this statement in his speech at the Conference of the Parties 28 (COP28) in Dubai.
He noted that Indonesia has been consistent in reducing carbon emissions by improving the management of the land and forests and expediting the clean energy transition. The President emphasised that Indonesia is successfully reducing the rate of deforestation.
During the negotiations at COP28 Indonesia reaffirmed its efforts to cooperate with Brazil and the Democratic Republic of Congo through trilateral understanding reached during the COP26.
The cooperation aims to strengthen the influence of the world's three largest tropical forest owners in climate negotiations, including promoting results-based funding for emissions reduction from deforestation and forest degradation plus (REDD+).
Indonesia, a role model for community-based climate resilience
At the 10th Facilitative Working Group—Local Communities and Indigenous People Platform Road, Pirawan Wongnithisathaporn, from the Asia Indigenous Peoples Pact Foundation in Thailand said Indonesia’s efforts on community-based climate resilience is a world role model especially for indigenous communities.
Indonesia was represented by Bambang Supriyanto, Director General of Social Forestry and Environmental Partnerships who spoke on the development and recognition of indigenous peoples under the Social Forestry programme as well as through multi-party collaboration in empowerment efforts based on local wisdom for forest sustainability and alternative livelihoods.
In addition, Bambang reported that the Indonesian government also collaborates with international institutions through the Forest Programme project in Sanggau, West Kalimantan and the Social Forestry Strengthening Project in four provinces in order to increase multi-stakeholder assistance activities such as: increasing and strengthening of livelihoods as well as improving sustainable forest management.
Opportunities in production of wood pellets for renewable energy
Several companies are considering the commercial potential in the wood pellet industry. This sector is expected to grow due to the global movement toward renewable energy sources and in Indonesia several companies are investing in wood pellet factories.
For example, PT Indika Energy Tbk (INDY) is allocating US$21 million for its factory project this year. The factory is expected to be operational by year end with a production capacity of 10 tonnes per hour.
Also, PT Maharaksa Biru Energi Tbk (OASA) is developing renewable energy projects by constructing biomass-based factories in Bangka, Blora, and Banten.
Another company, PT Sumber Global Energy Tbk (SGER) has diversified its business by selling processed wood pellets to the energy industry. In other news, PT Mitra Biomass International, a joint venture company between PT Mitra Investindo Tbk, PT Pima Aset Lestari and Interra Resorts Limited are also in the wood pellet business.
Ministry aims to achieve 8 million hectares of social forestry by 2024
The Ministry of Environment and Forestry (KLHK) is optimistic that it can realise eight million hectares of social forestry approvals by 2024.
Bambang Supriyanto, the Director General of Social Forestry and Environmental Partnerships at the Ministry of Environment and Forestry, stated that as of September 2023, social forestry approvals have been granted for 6.3 million hectares, approximately half of the 12.7 million hectare target.
Bambang explained that social forestry, a national strategic project, had been progressing slowly due to a 35 percent budget cut during the three-year Covid-19 pandemic.
Rehabilitation of 600,000 hectares of mangrove forest
The Indonesian government has set a target to restore 600,000 hectares of mangrove forest by the end of 2024. The Ministry of Environment and Forestry (KLHK) is requesting support and involvement from organisations, institutions, ministries and local communities to achieve this goal.
The Director of Inland Water and Mangrove Rehabilitation at the Ministry of Environment and Forestry, Inge Retnowati, said that this target is contained in Presidential Regulation (Perpres) Number 120 of 2020 concerning the Peat and Mangrove Restoration Agency (BRGM).
The Decree aims to accelerate implementation of mangrove rehabilitation in North Sumatra, Riau, Riau Islands, Bangka Belitung, West Kalimantan, East Kalimantan, North Kalimantan, Papua and West Papua.
Diversifying export markets
The government is encouraging companies to target new markets such as India, ASEAN, Africa and Latin America to boost export growth.
Trade Minister, Zulkifli Hasan, explained that a task force on this issue has been established. Hasan explained that the task force is also responsible for accelerating the completion of negotiations on comprehensive economic partnership agreements, especially the Indonesia-European Union Economic Partnership.
Knock-down furniture exports to Europe decline
Sapto Daryono, the Chairman of the Regional Committee for the Indonesian Furniture and Crafts Industry Association (Asmindo) said that knock-down furniture exports are still experiencing a decline as global demand falters.
The Association had pinned hopes on the domestic market especially as the government encouraged furniture entrepreneurs to produce E-Catalogues.
However, the domestic market is increasingly difficult to penetrate because it is flooded with imported products which are offered at very affordable prices. He added, “people tend to choose cheaper products even though the quality of Asmindo products is higher and the products are unique.
He said he hopes locally made products will be given a chance so that imported goods do not dominate the local market.
In related news, according to ACE Director, Teresa Wibowo, the furniture market in Indonesia is predicted to grow further in the future and this will be good for Indonesian furniture businesses. Moreover, the Indonesian economy is growing and this will have a positive impact on the potential for development of the domestic furniture market.
"I continue to think positively about the future development of the Indonesian furniture business because many foreign investors are arriving to secure business. This year could be the revival of the national furniture industry, said Teresa, as the government is supporting several international exhibitions which could boost trade.”
The Indonesian forestry paradigm
The Ministry of Environment and Forestry has invited academics and the Dean of the Faculty of Forestry, Gadjah Mada, University (UGM) to offer inputs regarding the re-orientation of Indonesia's sustainable forestry development paradigm.
The Minister of Environment and Forestry, Siti Nurbaya, said it was important to formulate a re-orientation of sustainable forestry development and this discussion could be important for future forest management, including strengthening the National Level Forestry Plan (RKTN).
Minister Siti conveyed some notes for participants:
First, on a green manufacturing orientation, Minister Siti said this was something important and this would be the basis for the Ministry.
For example, when talking about social forests there is already a Presidential Regulation on Integrated Area Development based on social forests. The government has positioned National Parks as the centre or source of regional economic growth. National Parks can also provide examples for appropriate income distribution.
Second, it is necessary to develop a centre of excellence.
This is intended for forest landscape management. As a start, The Minister encouraged UGM's Special Purpose Forest Area (KHDTK) to become a centre of excellence in Java. She added, "because we have different landscapes, centres of excellence need to be developed in other locations such as Kalimantan and Sumatra”.
Third, Minister Siti said that forest management in Indonesia could be an evolutionary development with forests and other land uses at the centre.
Carbon trading scheme for forestry sector
Indonesia has launched a carbon trading scheme to boost GHG emissions absorption in the forestry and other land use sectors to reach carbon dioxide reduction targets by 2030.
The Chairman of the Indonesian Association of Forest Concessionaires (APHI), Indroyono Soesilo, in a press release, stated that half of the companies holding Forest Utilisation Licenses (PBPH) have been included in the carbon trading scheme, adding there are 600 PBPH holders that have been included.
According to Indroyono, PBPH holders must meet several requirements to enter the carbon credit scheme including drafting a Mitigation Action Plan Document before being included in the National Registration System. Emissions Reduction Certificate (SPN) will be released after a verification and monitoring processes.
Entrepreneurs encouraged to adopt multi-business forestry
The Ministry of Environment and Forestry is encouraging companies receiving Forest Utilisation Business Permits (PBPH) to implement Multi-business Forestry plans to support Indonesia's FOLU Net Sink 2030 which is in line with achieving the Global Development Goals.
The Director General of Sustainable Production Forest Management in the Ministry, Agus Justianto, explained that corrective steps are needed to strengthen strategic policies to stimulate the forestry sector, especially in the upstream sector and in addressing climate change.
This includes providing support to businesses to implement Multi-Business Forestry.
A change in the forest management paradigm through Multi-business Forestry is expected to encourage the development of various multifunctional forest management models so that the spectrum of types and business options that are implemented become wider.
For the implementation of Multi-business Forestry companies need to apply an appropriate management regime according to local conditions including environmental carrying capacity, land suitability, agro-climate and socio-economic institutions.
He emphasised that Multi-business Forestry needs to be interpreted not just as an exploitative business model but must be able to accommodate a variety of local, regional, national and even international interests.
Improving the human resources for the furniture and crafts industry
The Indonesian Furniture and Crafts Industry Association (Himki) stated that they are committed to improving human resources in the national furniture and crafts industry.
The Chairman of Himki, Abdul Sobur, stated that human resources are an important factor in the furniture and crafts industry and play a central role in determining product value.
However, Abdul Sobur admitted that some companies still have difficulty finding experienced and certified workers with skills. He added, the furniture and crafts industry is currently experiencing high competition with other industrial sectors for labour.
The Himki held a meeting with the Head of the Industrial Human Resources Development Agency, Ministry of Industry and conveyed some suggestions including the need to increase the budget for student scholarships at the Furniture and Wood Processing Industry Polytechnic (Polifurnika) as well as providing student scholarships at universities that have majors supporting the furniture and craft industry.
It is necessary to develop Vocational High Schools and universities related to the furniture and craft industry to achieve a link and match with the industry, he said. Also establishing integrated training centres would help upgrade the quality of human resources.
Industry ready to intensify presence in Asian markets
Wiradadi Soeprayogo, Chairman of the Indonesian Sawmill and Woodworking Association (ISWA), said the timber industries are ready to intensify marketing in Asian countries as they anticipate a further decline in demand in Europe and America which is already having a negative impact on ISWA members business.
He said in 2022 the export value of wood products and sawnwood reached US$2.4 billion but in 2023 (as of November) a decline of 13 percent was observed. He added that to penetrate new markets exporters must be prepared to meet the specific requirements in the various markets and prepared to address their concerns on environmental issues.
He said that these various challenges cannot be overcome by ISWA alone, but require inclusive collaboration with related parties, namely the government, universities and professional organisations.
Myanmar
Certification body seeks assistance in accreditation
A recent post on the Myanmar Forest Certification Committee (MFCC) website mentions cooperation between MFCC and counterparts in Vietnam to address issues of accreditation of the certification bodies who are notified by MFCC.
The post mentions that “in a significant step towards promoting sustainable forest practices and gaining international recognition for national certification bodies, MFCC joined a study tour to Vietnam with the Myanmar Accreditation Body (MAB) and the Certification Bodies (CB) notified by MFCC.
The post adds that the MFCC sought assistance from the Vietnam Bureau of Accreditation (BoA) after the MFCC had tried unsuccessfully to cooperate with SAC (Singapore Accreditation Council) for a Joint-Assessment between Myanmar Accreditation Body and SAC for the Accreditation to Myanmar certification bodies.
Since the Myanmar Accreditation Body is not a member of any International Accreditation Forum, it alone cannot accredit CBs in Myanmar. Against this background the Myanmar Accreditation Body had to consider cooperating with another National Accreditation Body for a joint-assessment of the Myanmar’s CBs.
It is understood that in, the absence of international accreditation, Myanmar CBs were not recognised in international markets and the Myanmar conformity assessment reports on the legality of Myanmar Forest Products were viewed as unverifiable.
The cooperation with Vietnam was carried out under an ITTO-MFCC Project and the joint-assessment process was outlined between Myanmar and Vietnam which, it is hoped, will lead to the international recognition of Myanmar Certification Bodies.
Emerging role of NTFP and plantation timber
The Myanmar Wood-Based Furniture Association (MWBFA) has taken another step in its business promotion efforts with a visit to Union Minister of Natural Resources and Environmental Conservation (MONREC) to discuss the opportunities from utilising non-timber forest products and plantation species other than teak.
Early this month the MWBFA sponsored the Myanmar Furniture Exhibition. According to local news outlets the Association members showcased furniture made from non-timber forest products such as rattan, bamboo and from fast growing plantations species such as Acacia.
Because of sanctions on the Myanma Timber Enterprise (MTE) opportunities for wood product exports are impacted. The MTE is the State institution which is solely authorised to extract timber from the natural forest.
Commentators in Myanmar are of the opinion that timber from the private plantations and non-timber forest products (NTFP) could be exempted from sanctions since there is no direct or indirect involvement of the MTE.
Myanmar furniture makers eye the domestic market
The Myanmar Wood-Based Furniture Association (MWBFA) sponsored the Myanmar Furniture Exhibition 2023 at a popular shopping mall to promote sales in the domestic market in the face of falling international demand and trade restrictions. This event was timed to be during the so-called ‘marriage season’ when demand for furniture rises.
Furniture manufacturers face a major challenge from imported furniture which is often cheaper than locally made items.
In addition to the classic designs with solid wood, manufacturers have started to use the finger-jointed plantation teak.
Myanmar teak was in demand in international markets for garden furniture but this market has closed due to international measures against Myanmar wood products and the strict domestic regulation of export procedures for wood products some of which have been eased recently.
India
Weak demand for film faced plywood
Plywood manufacturers have reported that demand for film faced plywood has weakened in the past months. This type of plywood is mainly used in construction and in October and November demand from construction companies fell. In particular, demand in Bangalore, Mumbai, Delhi has been slow, and this has been put down to the effect on construction activity of the very high air pollution. Observers point out that air pollution issues are a yearly phenomenon.
The other reasons for the slowdown is the Diwali festive season when work slows across the country. The current slow market is expected to recover with the launch of new real estate projects.
This helped the economy grow at a remarkable 7.6 percent in the quarter. In contrast, Western economies have been squeezed by high interest rates and energy prices while the economy in China has been hit by a debt crisis in its property sector.
Land owners to see gains from planting commercial tree species
The new law on forest conservation exempts agroforestry and plantations from regulatory oversight which, it is anticipated, will encourage land owners to plant commercial tree species.
As a follow up to the new law, the central government has published a fact sheet listing 36 species that it suggests for various climatic zones in the country.
The 36 species include Leucaena leucocephala or subabul and various varieties of eucalyptus. The list also includes important timber species such as poplar, teak, shisham (Indian rosewood) and mahogany.
Domestic production of teak in India is considered to be less than three percent of consumption and as demand increases this has driven up prices.
The preamble of the Forest Conservation (Amendment) Act 2023 focuses on achieving India’s goal of net-zero greenhouse gas emissions by 2070.
Environment Minister, Bhupender Yadav, is reported a saying it is clearly indicated in the new Bill that private land owners will be free to decide whether or not to plant commercial tree species which will create an opportunity for land owners, especially small land owners, to generate additional income.
Mandatory Standards for panels and furniture
The Bureau of Indian Standards (BIS) has issued mandatory quality control orders for plywood, blockboard, doors, MDF, particleboard, shuttering ply and a range of other products and advised businesses to prepare and secure BIS compatible. The order applies to domestic producers and overseas suppliers.
The Order, called the Wood-Based Boards (Quality Control) Order, 2023 will come into force six months from the date of publication of the notification. The Government order will apply tom overseas producers of MDF and Plywood who export materials to India and suppliers have been anxiously contacting importers.
The BIS order is mandatory for all companies and it is understood that plywood manufacturers in India’s unorganised sector will be given up to twelve months to comply. The BIS order will apply to wood products manufactured locally for export and the entry into force will be six months for large companies, nine months for medium sized companies and 12 months for small and micro industries.
Sources at the BIS confirm that overseas panel producers have been approaching the BIS office to be certified but for many there are questions such as “how to get BIS certification and what are the costs for meeting the BIS Standard”.
Products affected
Panels
MDF is being imported to India from Vietnam, Malaysia, and Thailand. Similarly, plywood is being imported from Russia, Vietnam, Nepal, Indonesia, Malaysia and China and others. Particleboard is being imported mainly from Malaysia, Thailand, China and Vietnam.
After the notification of mandatory BIS for these products the importers are insisting that overseas shippers obtain the BIS standard.
The Indian particleboard industry has a very short of time to secure the ISI Mark (a standards-compliance mark for industrial products in India since 1950. The mark certifies that a product conforms to an Indian standard) because the deadline for them is 10 February 2024.
According to the BIS, approximately 80 percent of particleboard and pre-lam particleboard producers have not obtained an ISI mark from the BIS.
BIS Officials confirm that the BIS Quality Control Order is final and for the benefit of consumers and that the industry should come forward and secure certification.
It has been reported that India has 90 pre-lam board producers but as of October this year only 18 have ISI certificates.
Furniture
The government also proposes bringing furniture under BIS marks, but this has been resisted by local manufacturers and importers saying quality standardisation will be very difficult to meet.
The Bureau of Indian Standard (BIS) wants beds, wooden tables and chairs to be able to take a load of 110 kgs and 60 kgs respectively and meet stability, strength and durability tests.
The industry says that the Quality Control Order (QCO), which applies to imported and domestically produced beds and chairs, is putting excessive burdens on them as the Standards are tough to comply with.
The private sector and industry bodies have sought a review of the Standards arguing that they should be aligned with international standards. They also want a phased implementation plan instead of rolling out the Standards at one time.
The government proposed bringing wooden furniture under the Quality Control Order from 2025.
Plywood
It is understood that the main plywood manufacturing companies have requested BIS to reconsider the quality standards as for B Grade plywood/inferior quality plywood there is no specific standards for which certification from BIS can be secured.
They argue that the standards were made several years ago and needs to be updated taking account of the reality in the market.
Also, there are over 1,000 small and micro manufacturers (unorganised sector) which are producing plywood and for them buying new machinery, laboratory equipment and implementing quality control procedures will be expensive and they asked for more time and a waiver on marking fees.
MDF
Medium Density Fibreboard (MDF) is another industry in India which is relatively young having been operating for around 15-20 years and the sector is dominated by big corporations and is well organised.
As of October, 70-80 percent of MDF manufacturers were certified companies hence BIS will hardly affect the domestic MDF manufacturers. However, importers of MDF will face some hurdles as the overseas suppliers will require BIS certification.
Decorative plywood
Decorative Plywood is heavily dependent on imported base panels coming from Malaysia, Indonesia and China.
As of November, BIS Certifications have not been issued to any overseas manufacturers/suppliers of plywood for the manufacture of veneered decorative plywood.
Industry sources say it may take companies three to six months to secure BIS certification and there is considerable concern among manufacturers and importers.
Vietnam
Wood and wood product (W&WP) trade highlights
According to preliminary statistics provided by Vietnam General Department of Customs in November 2023 Vietnam’s W&WP exports reached US$1.3 billion, up 1.4 percent compared to October 2023 and up 11 percent compared to November 2022.
Of this, WP exports contributed US$880 million, up 0.8 percent compared to October 2023 and up 15.7 percent year-on-year.
In the first 11 months of 2023, exports of both W and WP are estimated at US$12.2 billion, down 17 percent over the same period in 2022. In particular, WP exports are estimated at US$8.3 billion, down 19 percent over the same period in 2022.
Vietnam's imports of wood raw materials in November 2023 amounted to 406,300 cubic metres, worth US$133 million, up 10 percent in volume and 10 percent in value compared to October 2023.
However, compared to November 2022, there was a decrease of 16 percent in volume and a decrease of 24 percent in value.
In the first 11 months of 2023, imports of raw wood are estimated at 4,054 million cubic metres worth US$1.376 billion, down 27 percent in volume and 35 percent in value over the same period in 2022.
W&WP exports to Japan in November 2023 amounted to US$126 million, down 27 percent compared to November 2022.
In the first 11 months of 2023 exports of wood and wood products to Japan are estimated at US$1.5 billion, down 12 percent over the same period in 2022.
Exports of office furniture in November 2023 were valued at US$23.9 million, down 10 percent compared to November 2022.
In the first 11 months of 2023, office furniture exports are estimated at US$245 million, down 28 percent over the same period in 2022.
Vietnam's NTFP exports in October 2023 reached US$57.37 million, up nine percent compared to September 2023 and up nine percent compared to October 2022. Over the first 10 months of 2023 NTFP exports earned US$596.19 million, down 14 percent over the same period in 2022.
Wood pellet production and exports
Vietnam has now become the second largest wood pellet producer in the world, only after the US.
Most of the pellets produced in Vietnam are exported, with over 95 percent of the export volume going to Korea and Japan as input materials for power generation.
The Vietnamese government released a report ‘Wood pellet production and export of Vietnam - Current dynamics and market trends’. Customs data on pellet export volumes and values were reviewed by a Research group from Forest Trends and Vietnam timber associations.
Key takeaways
South Korea and Japan are the two largest wood pellet import markets of Vietnam. The volume of wood pellets exported from Vietnam to these two countries accounts for over 95 percent of the total volume of wood pellets exported from Vietnam to all markets.
The source of raw materials for the production of pellets exported to South Korea and Japan is different. Wood pellets exported to Korea are mainly made from the by-products of the wood processing industry such as sawdust, shavings and wood chips.
Enterprises exporting pellets to South Korea are mainly located in the Southeast region, where furniture factories are concentrated. Pellets exported to Japan have to be made from domestic plantation timber with FSC certificate.
This material is only available where there are large regions of plantation forests, especially from the Central region to the North of Vietnam. From the second quarter of 2022, the export market for wooden furniture has declined.
The by-products of the wood processing industry used for producing wood pellets have also decreased. This created a shortage in raw materials for pellets exported to South Korea.
The energy crisis caused by the Russian-Ukraine conflict has caused the demand and price of pellets in the world market to increase sharply. This has led to a wave of investment in wood pellet production not only in Vietnam but also in other countries.
This wave has increased the competition between wood pellet enterprises in Vietnam and between Vietnamese enterprises and enterprises in other countries such as Malaysia, Thailand and Indonesia in the future.
At the beginning of 2023, the Korean market experienced very strong fluctuations. The price of pellets exported to Korea from Vietnam fell below US$90/tonne (FOB) in April, which was below the production cost of many enterprises. Many, especially small-scale businesses, had to stop operating. Import volume also dropped sharply.
In the first five months of 2023 (5M/2023), the volume of pellets exported from Vietnam to South Korea was 0.65 million tonnes, equivalent to US$96.1 million in value, dropping by 41 percent in volume and 45 percent in value compared to the same period of 2022.
The Japanese market is highly stable in terms of both quantity and price. In the first five months of 2023, the amount of pellets Vietnam exported to Japan reached 0.87 million tonnes, with a value of US$151 million. The volume exported fell by six percent while the export value increased by 20 percent compared to the same period of 2022.
It is forecast that in the final months of 2023, Vietnam's production and export of wood pellets will not have much change. Specifically, (a) The volume and price of exports to Korea will increase, following the current momentum but will not increase dramatically.
Timbers from Laos and Cambodia—import ban extended
Five years ago. Vietnam’s Ministry of Industry and Trade issued Circular No. 44/2018/TT-BCT regulating the temporary suspension of import and re-export of round wood and sawnwood from natural forests from Laos and Cambodia. This Circular is effective until December 31, 2023.
After 5 years of implementation, the Ministry of Industry and Trade has conducted a review and assessment of the implementation of Circular No. 44/2018/TT-BCT.
Based on the results of the summary and assessment and to avoid legal gaps when Circular No. 44/2018/TT-BCT expires, the Ministry issued Circular No. 21/2023/TT-BCT dated November 14, 2023 extending the suspension of import and re-export of roundwood and sawnwood from natural forests in Laos and Cambodia.
Vietnam is committed to implement policy mechanisms and measures to improve the effectiveness of forest management and forest product management to ensure compliance with international norms and regulations.
Vietnam has participated in a Voluntary Partnership Agreement between Vietnam and the EU on forest law enforcement, forest governance and forest product trade (VPA/PLET), the Convention on International Trade in Endangered Species of Wild Flora and Fauna (Cites) and is active in strengthen measures to protect the environment and to combat climate change.
Certification of 1 million hectares
It has been determined that sustainable forest certification for one million hectares of large-sized timber forests can be a passport for Vietnam's wood processing industry to increase export earnings and diversify markets. Moreover, achieving sustainable forest certification for one million hectares of large-sized timber forests will help reduce dependence on imported raw materials.
According to statistics from the Department of Forestry, the country's current total forest area is about 14.74 million hectares. Of this planted forests account for 31 percent.
In 2022, Vietnam earned US$15.67 billion from exporting forest and wood products. The country aims to achieve US$18-20 billion from exports by 2025 and US$23-25 billion by 2030.
According to Vu Thanh Nam, Head of the Forest Department’s Forest Utilisation Division, the country currently has about four million hectares of production forests providing about 20 million cubic metres of wood and this is planted mainly with acacia, eucalyptus, cinnamon and pine.
However, forestry experts advised that Vietnam should switch to investing in large-sized timber forests to further increase export value.
Of the four million hectares of production forests the plantation area of large sized timber (over 10 year old) is currently about 440,000 hectares.
The State has a policy to support forest planting at VND8 million per hectare and the Ministry of Agriculture and Rural Development has submitted to the Government proposals to promulgate a policy for forest planters to borrow capital to produce large sized logs.
The Ministry of Agriculture and Rural Development is developing a project to create plantations to produce large sized logs including mechanisms and policies on cooperation and association with the aim to have one million hectares of large-sized timber forests by the end of 2030.
In addition, local groups and communities will be encouraged to plant for long rotations to produce large logs.
According to Tran Lam Dong, Deputy Director of the Vietnam Academy of Forest Sciences, it is necessary to expand cultivating trees in areas with sustainable tree-planting certification to produce raw material for manufacturers.
Vietnam has two types of forest certification including the national forest certification system (VFCS) from the Office of Sustainable Forest Management Certification and FSC forest management certification from the International Forest Stewardship Council.
As of September 2023, Vietnam's total forest area that has achieved both VFCS and FSC certification is nearly 500,000 hectares.
Vietnam, a model in forest protection and sustainable development
Vietnam intends to implement international commitments and also create new values for agricultural development.
The European Commission (EC) has recognised Vietnam’s quick action in adapting to the European Union Deforestation-free Regulation (EUDR), saying Vietnam's message of turning challenges into opportunities has inspired the EC in working with partners.
The information was revealed at a working session between a delegation from the Ministry of Agriculture and Rural Development (MARD) led by Minister Le Minh Hoan and the EC’s officials.
During working sessions with the EC Commissioner for Environment, Oceans and Fisheries, Virginijus Sinkevičius, Hoan stated that the Vietnamese Government's policy is to guide agriculture towards an ecological, green and sustainable direction.
Vietnam not only wants to implement international commitments but to create new values for agricultural development accompanied by environmental protection, preserving resources for future generations, and contributing to global sustainable development, he said.
The Minister also highlighted the Vietnamese Government's commitment to developing a transparent, responsible, and sustainable agricultural sector as Vietnam has become a major food supplier in the world.
Regarding the EUDR, Hoan said that Vietnam's message of compliance with the regulations meets the requirements for exporting coffee, rubber, wood and wood products to the EU market.
It is also an opportunity to develop Vietnam's agriculture sector in line with the sector's strategic orientation of transparency, responsibility, sustainability and green growth.
As soon as EC approved the EUDR, MARD participated in many in-depth discussions at both EC’s technical and leadership levels as well as quickly directed specialised agencies to prepare an adaptation action plan framework for the EUDR.
China
Log imports from New Zealand remained firm
According to China Customs, in the first 10 months of this year, log imports from New Zealand were 14.51 million cubic metres, up slightly (1.1%) accounting for 46 percent of the national total and valued at US$1.796 billion, down 20 percent.
The volume of New Zealand's log exports to China did not show significant growth up to October this year.
In the first 10 months of 2023, imports increased by about two percent percentage points year on year and in the third quarter of 2023 imports fell by 17 percent quarter-on-quarter and 11 percent year-on-year.
After a three-month decline in imports between July and September 2023 China’s log imports from New Zealand rose 18 percent to 1.57 million cubic metres in October, up three percentage points year-on-year.
The average CIF price for log imports from New Zealand in October fell 21 percent to US$124 per cubic metre over the same period in 2022. The CIF price for log imports from New Zealand fluctuated between January and October in 2023.
It has been reported that prices for New Zealand logs are showing signs of recovery. Prices in November 2023 were US$9 per cubic metre higher than in October 2023 and prices for logs from North Island exporters in New Zealand rose US$5-10 per cubic metre.
It has become apparent that New Zealand forestry companies are seeking new markets, however, China accounts for more than 80 percent of New Zealand log exports.
In addition to the Chinese market, New Zealand is also exporting logs to South Korea and India is being considered as a new target market. The Indian market has become more attractive as prices paid by Indian importers are now close to those paid in China.
New Zealand timber traders have suggested prices in the Korean market are trending below those for the Chinese market at present. Behind the decline in New Zealand log prices is weak domestic demand and a slowdown in international demand. It is anticipated that China's future imports of New Zealand logs will be maintained at current levels.
National forest reserve project for Guangxi
According to the State-owned Assets Supervision and Administration Commission of the State Council, a RMB10 billion national forest reserve project strategic framework agreement was recently signed between China Energy Engineering Group Guangxi Electric Power Design Institute and the People’s government in Baise City of Guangxi Zhuang Autonomous Region.
The agreement says the two sides will cooperate to establish a national reserve forest of nearly 67,000 hectares in six counties (districts) including Youjiang District, Debao County and Tianlin County.
The focus will be on the development of mainly commercial species such as eucalyptus, pine, Chinese cedar as well as oil-tea camellia and star anise.
The new forest reserve will improve forest quality, enhance forest carbon sequestration and promote green industry development and rural revitalisation and help to achieve the goal of ‘carbon peak, carbon neutrality’.
Guangxi has been ranked first in timber production in China for 16 consecutive years and is the largest and most important wood production base in the country. The signing of this agreement is an example illustrating that China can establish forest projects to promote the sustainable development of the industry and address climate change.
Plywood exports to the Middle East and Africa increase
According to China Customs in the first eight months of 2023 plywood exports were 6.983 million cubic metres valued at US$3.193 billion, a year-on-year decrease of four percent in volume and 19 percent in value.
China’s plywood exports to the Philippines and UK, as the first and second destinations, fell 11 percent and eight percent respectively in the first eight months of 2023.
China’s plywood exports to the Middle East and Africa increased. China’s plywood exports to Nigeria surged 88 percent from the same period of 2022. China’s plywood exports to UAE, Saudi Arabia and Israel rose 12 percent, three percent and 28 percent respectively in the first eight months of 2023.
Surge in tropical plywood exports to the Philippines
According to China Customs, tropical plywood exports amounted to 383,000 cubic metres valued at US$161 million in the first 8 months of 2023, a year-on-year decrease of five percent in volume and 17 percent in value from the same period of 2022.
Tropical plywood exports to the Philippines, as the largest destination country, surged 64 percent year-on-year to 78,000 cubic metres.
At the same time, China’s tropical plywood exports to Mexico and South Korea also rose 47 percent and 34 percent respectively. China’s tropical plywood exports to other destination countries and regions fell at different rates in the first eight months of 2023.
Decline in both wood furniture exports and imports
According to China Customs, wooden furniture exports and imports fell in the first 10 months of 2023.
China’s wooden furniture exports in the first 10 months of 2023 were worth US$19.35 billion, a year-on-year decline nine percent.
The US remained the largest market for China’s wooden furniture exports in the first 10 months of 2023 but the value of exports to the US were US$5.64 billion, down five percent year-on-year, accounting for 29 percent of the national total.
China exported wooden furniture to more than 200 countries in the first 10 months of 2023 and the value of wooden furniture exports to the top 5 markets accounted for just 53 percent of the national total.
China’s wooden furniture exports to UK, alone, rose among the top destination countries. However, China’s wooden furniture exports to the US, Australia, Japan and South Korea fell five percent, 16 percent, 13 percent and five percent respectively in the first 10 months of 2023 resulting in the overall decline in wooden furniture exports.
China’s wood furniture exports to Italy just amounted to US$132 million but rose 22 percent in the first 10 months of 2023.
Wooden furniture imports
China’s wooden furniture imports amounted to US$637 million in the first 10 months of 2023, a year-on-year decline 15 percent. Italy was the largest supplier of wooden furniture imports in the first 10 months of 2023 and they were worth US$286 million, down 16 percent year-on-year and accounting for 45 percent of the national total.
China imported wooden furniture from more than 80 suppliers worldwide and the value of China’s wooden furniture imports from the top eight suppliers accounted for 83 percent of the national total.
China’s wooden furniture imports from Sweden, alone, rose among the top suppliers. However, China’s wooden furniture imports from the other top suppliers fell at different rates in the first 10 months of 2023 resulting in the decrease of the national total wood furniture imports.
China’s wood furniture imports from USA in the first 10 months of 2023 amounted to US$3.76 million, a year-on-year decrease of 40 percent.
Signs of recovery are mixed
Consumer prices fell in October after briefly levelling out, a sign that consumers remain cautious despite the government stimulus measures. Also, producer prices fell for a 13th consecutive month, dropping 2.6 percent year-on-year, against a 2.7 percent decline forecast by economists and following a 2.5 percent contraction in September.
China’s economy has shown mixed signs of recovery in recent months leading economists to debate whether it will hit the government’s GDP growth target this year of five percent, the lowest in decades. Prices fell into negative territory in July before edging back into growth in the months that followed.
The IMF has upgraded its forecast for China’s GDP growth to 5.4 percent citing stronger support from policymakers who have been easing monetary policy and easing restrictions on property purchases and mortgages to try to stabilise the real estate market.
Group standard on carbon footprint accounting
Eleven departments, including the Standardisation Administration of China, the National Development and Reform Commission and the Ministry of Industry and Information Technology jointly issued the Guidelines for the Construction of a Carbon Peak and Carbon Neutral Standard. The Carbon Peak and Carbon Neutral Standard system was structured around basic universal standards as well as the development needs for carbon reduction, carbon removal and carbon market development.
A Technological Specification for Carbon Footprint Accounting for Timber Products was recently published with aim of responding to national policies and promote systematic construction of carbon peak and carbon neutral standard system.
The Standard number is T/TSNR002-2023. This Standard is China's first carbon footprint accounting standard for timber product.
The release of this standard makes up for the gap in the field of carbon footprint accounting for wood products and improves the transparency and consistency of the evaluation and notification of carbon footprint accounting for wood products to help enterprises better understand the carbon footprint of their wood products to achieve targeted carbon reductions.
Inner Mongolia's "made in Ulanqab" furniture exported to Russia
Finished furniture made in Ulanqab City, Inner Mongolia Autonomous Region are being exported to Russia on the China-Europe train for the first time, the destination is Russia’s Yekaterinburg. 24 categories of furniture were shipped such as sofas, beds, dining tables and chairs which were customised according to the needs of Russian customers.
Chinese enterprises imported timber from Russia to Ulanqab through the China-Europe freight train for processing into furniture products and then re-exported these items to Russia and other countries. Chinese enterprises have a large number of customers in Russia.
Chinese enterprises will rely on the China-Europe freight train and Ulanqab's geographical and resource advantages, strengthened industrial advantages and extended industrial chain to provide impetus for cross-border, cross-regional and cross-field industrial cooperation in the future.
More local products from Ulanqab will be exported to create new patterns of foreign trade in Ulanqab City.
Since the first China-Europe freight train was launched in Ulanqab city in 2016 the development of the train service has been continuously improved.
Since the beginning of 2023, the total number of China-Europe freight trains from Ulanqab City was 114 trains with 4,690 carriages, up 200 percent year-on-year with a total cargo value of US$203 million and a total cargo weight of 63,200 tonnes.
This has provided a solid foundation for Ulanqab City to actively participate in the construction of the China-Mongolian-Russia Economic Corridor.
