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ITTO TROPICAL TIMBER MARKET REPORT

Rising logistics, energy and labour costs are taking a toll on wood-based product manufacturers in
Asia. With increasing trade barriers and global uncertainties, countries are looking to adapt throw
diplomacy and more trade cooperation. At the same time, the carbon market is making significant
progress in the region. ITTO tells us more.

MALAYSIA including job losses, weakened supply chains and erosion
Wood-based sector facing a triple burden of global market share.
The Malaysian Timber Association (MTA) has called for It said the expansion of the Sales and Service Tax (SST),
government intervention warning that the wood-based sector effective since July 2025 which removed the tax exemption
is facing a triple burden of higher taxes, rising diesel costs and for sawn timber, has resulted in cost increases across the
foreign labour shortages which have eroded its competitiveness entire value chain.
in global markets. Sawn timber is now subject to a five percent sales tax
The Association also said the combined pressures are leading to an estimated eight percent to 12 percent increase
driving up costs and constraining production in the sector. in downstream production costs due to a “tax-on-tax” effect

MTA warned that “this is no longer a cyclical challenge but from mill to finished products.
a structural threat to one of Malaysia’s key export industries”, The Association urged the Ministry of Finance to reinstate
adding that decisive policy action now will determine whether the full tax exemption for sawn timber and recognise it as a
Malaysia strengthens or surrenders its position in the global raw material for construction materials to eliminate cascading
timber and furniture market. cost and restore export competitiveness.
MTA noted that Malaysia remains among the world’s leading In addition, the industry is also grappling with elevated
furniture exporters and stressed that any prolonged disruption diesel prices. Given the industry remains heavily dependent

to the sector risks far-reaching economic consequences, on diesel it has no buffer against price volatility.

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