Malaysia
Cautious optimism on GDP outlook
Malaysia’s economic forecast for 2025 is being maintained for now amid the uncertainties surrounding global trade and implications US tariffs will have on the country’s exports as well as how they will shape supply chains across the world.
Analysts expressed cautious optimism on the country’s economic growth with the Socio-Economic Research Centre (SERC) estimating gross domestic product (GDP) growth at five percent for this year, the mid-point of government forecasts of 4.5 percent to 5.5 percent, with domestic demand supporting growth.
Timber the third largest contributor to commodity exports
Malaysia's wood product exports rose almost five percent in 2024 to RM22.9 billion, up from RM21.85 billion in 2023 according to the Ministry of Plantation and Commodities.
Under the National Agricommodity Policy 2030, the Ministry aims to reach a timber export target of RM28 billion by 2025. Minister, Datuk Seri Johari Abdul Ghani, said the timber industry is the third largest contributor to commodity exports after palm oil (RM114 billion) and rubber (RM33 billion).
Minister, Johari, reported Bumiputera entrepreneurs also recorded a notable rise with exports totalling RM44.03 million, up 33 percent from the previous year. However, Bumiputera entrepreneurs still account for less than one percent of the total export value.
The main products produced by Bumiputera entrepreneurs are sawnwood and wooden furniture.
Most Bumiputera-owned businesses in the timber industry are still classified as small or micro enterprises, reflecting ongoing challenges in expanding within the sector.
While there are many opportunities small or micro enterprises can pursue, he said, the lack of a reliable supply chain holds them back.
The Minister suggested small or micro enterprises need to collaborate with well-established and successful companies that are already part of the existing supply chain.
Johari said the national timber agencies, the Malaysian Timber Industry Board (MTIB) and the Malaysian Timber Council (MTC) are continuously working to enhance Bumiputera competitiveness and involvement in the timber industry.
Furniture industry and AI
A leading Malaysian manufacturer of sofas and cabinets is set to increase production by as much as 30 percent next year as the company shifts towards artificial intelligence technologies.
A company representative and also Deputy Secretary-General of the Malaysian Furniture Council said the adoption of smart factory technology, incorporating Fourth Industrial Revolution (IR 4.0) methods set to add value to the company’s furniture brand, particularly in customer service.
Expanding wood products certification scheme
The Sarawak Timber Association (STA), in its latest STAReview, reports on the Malaysian Timber Industry Board (MTIB) engaging the Institute of Tropical Forestry and Forest Product of Universiti Putra Malaysia to recommend improved data generation to expand MTIB’s Wood Product Certification Scheme.
This is part of the Government's efforts to explore opportunities to expand the certification scheme to include products that meet the demand in the global market.
In this connection, a roundtable session with stakeholders was held to exchange ideas and discuss issues related to requirements, impacts, challenges, opportunities and relevance of certification in advancing the country's Sustainable Development Goals.
Discussions included offering incentives to companies that demonstrate strong commitment to improving product quality, implementing cost-sharing measures to ease the financial burden on businesses, ensuring government recognition of certified products, enhancing market access for certified product and strengthening collaboration and synergy among various Government agencies.
The STAReview also reported that the Malaysian Timber Certification Council (MTCC) organised an inception workshop for the ‘Promoting Sustainable Wood Use for the Domestic Market in Malaysia’.
The workshop was attended by policymakers, research institutions, timber associations and industry players to discuss and provide inputs on the project inception report.
In his opening remarks, Akmal Saarani, Director (Chain of Custody) at MTCC announced that this project, funded by the International Tropical Timber Organization, is an initiative aimed at enhancing and diversifying domestic consumption while promoting local markets for sustainable wood and wood products in Malaysia.
With MTCC appointed by the Ministry of Plantation and Commodities as the executing agency, this 18-month project has the ambitious goal of increasing domestic consumption, improving supply chains and reinforcing government policies related to the use of sustainable wood products.
Sabah Timber Industries Association supports plantation plan
Sabah Timber Industries Association (STIA) reaffirmed its commitment to support the State Government’s forest plantation target of planting 400,000 hectares as outlined in the Forest Plantation Development Action Plan.
Its President, Tan Peng Juan, said this initiative aims to reduce reliance on natural forest species.
The Forest Plantation Development Action Plan (2022–2036) is a strategic initiative by the Sabah Forestry Department aimed at transforming forest plantation development in Sabah. It was launched in March 2022.
The 15-year plan provides guidance in accordance with sustainable forest management principles as outlined in the Sabah Maju Jaya Development Plan (2021–2025) and the Sabah Forest Policy.
The Sabah timber industry recorded a steady increase in exports from January to November 2024, with an average rise of 11 percent in volume and six percent in value compared to the same period in 2023.
Japan remained the largest importer accounting for 22 percent of the total export value followed by the US (11%) and Taiwan (9%). Exports to European countries were negligible contributing only around two percent to total earnings.
Malaysia-EU FTA negotiations to resume
It has been reported that long stalled negotiations for the Malaysia-EU Free Trade Agreement (MEUFTA) will resume.
In 2023, the EU was Malaysia’s fourth largest trading partner with trade reaching RM206.79 billion.
For the period of January to November last year trade with the EU grew by five percent to RM 200billion compared to the same period in 2023.
As of 2023, the domestic press reports EU investments in Malaysia have generated over 153,000 jobs through 1,323 projects valued at RM227.9 billion.
Indonesia
Indonesian wood products prepared for the EUDR
The Ministry of Forestry is ensuring that exports of Indonesian forest products are ready to face the EUDR.
The Director General of Sustainable Forest Management, Ministry of Forestry, Dida Migfar Ridha, said "We are ready for EUDR, we are ready with the timber legality verification system or SVLK to ensure traceability of forest products."
Dida mentioned that the SVLK has incorporated geographical locations to satisfy export requirements. However, he also hopes the European Union and Indonesia can collaborate and agree on a common reference map.
Encouraging down-streaming of furniture sector
The Ministry of Industry continues to implement its forest products down-streaming policy to add value.
One of the actions is through the development of an innovative and competitive furniture industry. This aims to strengthen the industrial structure, create jobs, encourage exports and support import substitution.
The Director General of Agro Industry of the Ministry of Industry, Putu Juli Ardika, revealed that the furniture industry contributed 1.15 percent to non-oil and gas GDP in 2024.
At a National Working Meeting of the Indonesian Furniture and Craft Industry Association (HIMKI) Putu said "the furniture industry is an important part of the agro industry sector which recorded a growth of 2.07 percent in 2024.
In the period of January-November 2024, the value of Indonesian furniture exports (HS 9401-9403) reached US$1.47 billion, an increase of 0.7 percent compared to the previous year. However, the national furniture industry faces challenges, including logistical constraints due to geopolitical conditions and environmental sustainability regulations in export destination countries.
In addition, rising imports of metal and plastic furniture have become a competitor for the wooden furniture industry.
To face these challenges, the Ministry of Industry has prepared five main strategies, namely: facilitating the availability of raw materials, improvement of skilled human resources, market expansion and market research, increasing productivity and product quality and creating a conducive business climate.
Putu emphasised that the national furniture industry must continue to pay attention to the domestic market with more efficient and environmentally friendly production innovations.
Broaden export markets beyond the US
The Coordinating Minister for Economic Affairs, Airlangga Hartarto, aims to maximise Indonesia's potential in export markets beyond the US.
He stated that, given the US government policies Indonesia must explore trade opportunities worldwide. He added “we need to maximise on the Comprehensive Economic Partnership Agreement (CEPA) and to initiate trade cooperation with countries outside the US”.
The Minister Airlangga mentioned that drafting a legal framework for Indonesia's comprehensive economic cooperation with various other countries is already in progress.
He said "we are also collaborating with the Gulf Cooperation Council (GCC) and are looking closely at partnerships with others. The Minister said we hope that Indonesia's accession to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) will open markets in the UK, Canada and Latin America.
Improving human resource skills in the forestry sector
The Ministry of Forestry's Human Resources Extension and Development Agency is collaborating with the Indonesian Forestry Entrepreneurs Association (APHI) to encourage improvements in the quality of forestry human resources.
A memorandum of understanding was signed by the Head of Kemenhut, Indra Exploitasia and the General Chairperson of APHI Prof. Indroyono Soesilo.
Indra said that the cooperation that was established is expected to help increase the capacity of forestry human resources.
Indra hopes that APHI members can accommodate students who will undergo Field Work Practices. "We hope that students can become skilled workers in the forestry sector to support the President's ideals regarding down-streaming.”
Sustainable agriculture and food security initiative
A new initiative has been launched, namely the Forest, Agriculture and Sustainable Trade (FAST) Programme.
This initiative is a collaboration between Indonesia and the UK and aims to increase the sustainability of the agricultural sector as well as strengthen the competitiveness of Indonesian commodities in the global market.
At the launch of the FAST Programme the Coordinating Minister for the Indonesian Economy, Airlangga Hartarto, said “in recent years, the UK has become Indonesia’s main partner in efforts to promote sustainable agriculture and increase food security”.
The FAST Programme is designed to support small farmers face the challenges of modern agribusiness with better access to financing and technology.
In line with the vision of Advanced Indonesia and the Asta Cita national agenda the Indonesian Government has set priorities in achieving food and energy security as well as strengthening the downstream industry to increase domestic added value.
One of the strategic steps taken has been to expand access to financing and production facilities for farmers through the Plantation Fund Management Agency which now not only manages palm oil funds but also coconut and cocoa.
The FAST programme, which will last for 3.5 years (August 2024 to March 2028) with facilitation from UNDP is expected to increase global acceptance of Indonesian commodities.
This programme is in line with the Government’s efforts to respond to global green policies and strengthen the ISPO tracking system so that Indonesian palm oil products come from areas free of deforestations.
Forestry targets 400,000 job creation
The Minister of Forestry, Raja Juli Antoni, said the government is targeting an investment of IDR19.9 trillion in the forestry sector which is expected to create 400,000 jobs.
This was reported during a meeting with Commission IV of the Indonesian House of Representatives. The Minister stated that the theme for the Ministry of Forestry's development in 2025 is to enhance forest production and promote downstream activities to ensure equitable economic development across regions.
The forestry development theme for 2025 aims to achieve several objectives. The first is to enhance economic growth by increasing the contribution to GDP and increase exports by three to five percent; second, equitable regional development through increasing the capacity of forest farming groups by seven to eight percent and third; reducing deforestation by three to four percent.
Furniture and craft industry urged - be aware global challenges
Indonesia's furniture and craft industry is facing significant challenges due to the global situation, particularly the high tariff policies by the US said Fajarini Puntodewi, Director General of National Export Development at the Ministry of Trade.
He warned that Indonesian products may struggle to enter the US market adding "our primary export destinations are the US, which holds a market share of 53 percent and the European Union, accounting for over 15 percent.”
“Within the EU, significant markets include the Netherlands, Germany, Belgium, France and Spain, we also export to Asian countries such as Japan,” said Fajarini.
The domestic industry must improve as global demand for furniture and crafts remains promising.
The positive growth trend is projected at 15 percent. Specifically for furniture products the global market size reached US$770 billion in 2024 and is expected to reach US$925.46 billion by 2029.
New regulation on depositing export earnings a challenge says association
The Indonesian Furniture and Craft Industry Association (Himki) stated that the mandatory policy requiring the depositing of 100 percent of foreign exchange proceeds from export within one year could negatively impact the national furniture and craft industry which is export-oriented, labour-intensive and closely integrated with the global supply chain.
Export proceeds are essential for business capital, including for the purchase of high-tech production machines which also require access to foreign exchange because they have to be imported.
Business stakeholders are currently concerned about the requirement to deposit export earnings in domestic accounts as this could restrict their access to foreign currency.
Additionally, fluctuations in exchange rates could negatively impact exporters when converting currencies.
There are also risks to cash flow and the long-term sustainability of the business according to the Association as company's liquidity could be affected, particularly for small SME exporters who rely heavily on the flexibility of deposits for their operational and expansion needs.
The Association has requested the government carefully consider this policy to ensure it does not impede exporters in the creative industry sector who require significant support from the government.
He hopes a scheme will be established allowing companies to withdraw foreign currency in specific amounts without time limits provided it is used for productive purposes.
Indonesia introduced multi-business Sustainable Forest Management
At the ‘Forest Governance, Markets and Climate (FGMC) Stakeholder Forum 2025’ in London, Indonesia unveiled its Multi-Business Forestry Scheme to promote sustainable forest management.
Agus Justianto explained that in Indonesia traditional forest management faces the challenges of deforestation, loss of biodiversity and tenurial conflicts and that a transformation of forest management policies is needed.
Agus explained the transformation of forest management in Indonesia involves first reorienting forest management with a sustainable forest management approach and community involvement.
Indonesia, said Agus, is currently transforming its forest management policy by implementing Multi-Business Forestry (MUK) which is oriented towards forest landscape management.
By implementing MUK, forestry concessions can carry out various business activities in the form of utilising wood and non-wood forest products, environmental service and utilising areas to optimise the potential of forest products," said Agus.
Through MUK, community involvement in forest management will also be more open. This is because forestry concessions (Forest Utilization Business Permits/PBPH) can implement agroforestry to develop non-forestry commodities while still paying attention to forest sustainability.
Imported furniture is overwhelming the domestic market
Dedy Rochimat, the General Chairman of the Indonesian Furniture and Craft Industry Association (ASMINDO), has said the inflow of imported furniture into Indonesia remains a pressing concern for local furniture manufacturers who fear this may undermine the domestic furniture industry.
According to data from Statistics Indonesia, furniture imports in the first 10 months of 2024 increased by 16 percent year-on-year.
ASMINDO stated “as an organisation representing 90% of the SME sector ASMINDO is seeking support from the government to protect domestic manufacturers. ASMINDO has called for stronger regulatory measures to control the inflow of furniture imports and an emphasis on local products in government procurement”.
Myanmar
Myanmar’s timber industry - challenges and strategies for revival
Recent updates from the Forest Department's official Facebook page indicate that meetings have been held with wood-based industries across various regions to discuss recent regulatory changes.
These efforts aim to revive Myanmar's timber export sector which has been significantly impacted by denied access to major international markets.
These activities follow a December 2024 workshop focusing on forest development, sustainable timber production, plantations and strengthening wood-based industries.
Manufacturers often cite overly strict regulation as one of the barriers for the development of timber trade and exports.
Myanmar's wood-processing sector relies predominantly on primary processing. This approach yields a diverse range of sawn products catering to both domestic and export markets.
However, limited specialisation in value-added or secondary processing has resulted in a fragmented supply chain.
Until 2015, the Myanma Timber Enterprise (MTE) and Forest Management Units (FMUs) managed log supplies from multiple locations across the country.
The reduced active of FMU managers post-2015 reflects a structural shifts which may result in reduced harvesting quotas, resource depletion along with governance challenges.
This decentralised approach complicates documentation and traceability compared to other countries where more centralised, plantation-based systems dominate.
International assessments of management in Myanmar often fail to account for Myanmar's unique forestry context.
Such oversimplified evaluations overlook the complexities of Myanmar's natural forest dynamics and socio-economic factors. This underscores the need for tailored frameworks that recognise the country's decentralised and multifaceted supply chain.
Myanmar’s timber industry is undergoing significant transition influenced by resource availability, international market pressures and evolving policies.
The sector is adapting to global standards such as enhanced traceability. Achieving this under Myanmar's current socio-political and economic constraints is challenging.
By focusing on transparency, traceability and sustainable practices Myanmar could begin to rebuild trust in its timber industry and navigate its path toward a resilient and internationally accepted forestry sector.
India
QCO implementation disrupting the flow of panel imports
The Correspondent writes “market sentiment appears to be at an all-time low mainly because uncertainty over the BIS Quality Control Order (QCO) implementation which has disrupted the flow of panel imports.
Staff from the QCO Department responsible for mill inspections and certification have not visited many foreign panel manufacturers and there are indications that only two BIS certificates have been issued to overseas suppliers, both of which are in Nepal.
Thai, Indonesian, Malaysian, Chinese, Vietnamese and Russian shippers have applied for certification but they have not been advised of dates for mill inspection.
The Indian Standards Quality Control Order (QCO), BIS certification and ISI marks, came into effect on 10 February 2025 and is mandatory for domestic and imported MDF, particleboard and blockboard, plywood, shuttering plywood and other wood panel products.
The QCO implementation deadline for plywood was 28 February 2025. Plywood importers are pressuring shippers to dispatch orders immediately. Some say that, post QCO deadline, imports of veneers may increase.
Budget focus on stimulating consumption
The domestic media has reported on comments in a BNP Paribas analysis that the economically challenging times due to a slowdown in growth seems to be over as new orders, agriculture exports, rural wages, steel production, auto sales and tax collection picked up after the weak third-quarter 2024.
According to the National Statistical Office India’s GDP growth is projected at 6.4 percent for Financial Year 2025 with a more robust 6.7 percent growth expected in the second half of the fiscal year. The improvement is attributed to a stronger agriculture sector.
The BNP Paribas report also highlighted a focus in the Union Budget on stimulating consumption through which tax adjustments were made to boost disposable incomes, particularly for high-income households.
Kerala becoming a particleboard manufacturing hub
The Indian panel sector magazine, Ply Reporter, has said the South Indian state of Kerala is emerging as another Particle Boards manufacturing hub in India.
Recently three new manufacturing units have started production the capacity addition has reached to 2,500 cubic metres per day.
Reports say that most of the PB manufacturing lines have approximately 150 to 250 cubic meters per day production capacity of 8x4 ft size.
Vietnam
February exports jump almost five percent
According to the Vietnam Customs Office, W&WP exports in February 2025 earned US$800 million, up 4.5 percent compared to February 2024.
Of this, the WP exports contributed US$500 million, up 5.4 percent compared to February 2024.
In the first two months of 2025, W&WP exports amounted to US$2.2 billion, down 0.8 percent over the same period in 2024 of which, the WP share was US$1.48 billion, down 1.7 percent over the same period in 2024.
In January 2025 imports of raw wood (logs and sawnwood) totalled 413,400 cubic metres, worth US$127.3 million, down 18 percent in volume and 22 percent in value compared to December 2024.
Compared to January 2024imports decreased by five percent in volume and 12 percent in value. The reason for the decrease in the first month of 2025 is attributed to the impact of the Lunar New Year holiday.
NTFP exports in January 2025 decreased by seven percent compared to December 2024 and decreased by seven percent compared to January 2024 and were valued at US$74.42 million.
Vietnam preparing for the EUDR
Vietnam is a major global exporter of timber, coffee and rubber. As such the EUDR presents both challenges and opportunities.
For instance, adapting commercial operations to ensure the production of deforestation-free commodities will require adjustments, especially strengthening business due diligence systems.
At the same time, however, it also offers the potential to improve Vietnam’s sustainability credentials and global competitiveness.
With the EUDR the focus is shifting from voluntary action to a regulatory framework. Companies placing products on the EU market will be required to conduct due diligence. This includes ensuring products are deforestation-free, complying with national legislation and provide geolocation data for production plots.
Vietnamese enterprises are preparing a robust traceability systems and to conduct due diligence to ensure their products meet EUDR requirements.
The regulation’s traceability requirements may pose a challenge in some situations. But they may also create important possibilities for others. For example, they offer significant opportunities for smallholders in third countries, such as Vietnam, by ensuring a more transparent and traceable value chain.
Meanwhile, by owning their geolocation data, smallholders will gain greater independence in the value chain, enabling direct relationships with suppliers and fairer pricing.
Furthermore, the regulation will facilitate technical support and capacity building from business partners who depend on information exchange, helping smallholders and their cooperatives meet requirements.
Recognising the importance of the EUDR, the Vietnamese government is assisting stakeholders to build deforestation-free, legal supply chains. For instance, it is fostering collaboration among coffee, rubber and timber actors to address challenges in these sectors.
In doing so the government is encouraging the development of sustainable and climate-adaptive agricultural products and demonstrating its dedication to building sustainable, deforestation-free supply chains that meet EUDR requirements.
EU, a strong partner for Vietnam
The EU has introduced several measures to help stakeholders prepare for the implementation of the regulation.
These include comprehensive guides, a detailed FAQ, the creation of the European Forest Observatory and international dialogues designed to clarify regulatory requirements and encourage compliance.
Under the Team Europe Initiative on Deforestation-free Value Chains and with €80 million (US$82.4 million) of funding, the EU and several of its member states are supporting supply chain actors to ensure deforestation-free value chain production in partner countries like Vietnam.
The EU remains a strong partner for Vietnam in navigating the regulation. Through the EUDR Engagement project, the EU Delegation to Vietnam is working closely with the Ministry of Agriculture and Rural Development (MARD) to facilitate communication and implementation.
To support the transition under the EUDR Engagement initiative in the coming months, various activities have been planned.
A major component involves further outreach and capacity building for a wide range of stakeholders. This will ensure a better understanding of the new regulation and provide a platform to discuss the implications for Vietnam among different partners.
Businesses urged to diversify export markets
Speaking at a meeting held to introduce the 16th edition of Vietnam International Furniture & Home Accessories Fair (VIFA EXPO 2025) in HCM City on 19 February, Trần Quốc Mạnh, Deputy Chairman of the Vietnam Handicraft Exporters Association said the outlook for wood product exports in 2025 remains promising.
However, businesses need to adopt flexible strategies to cope with trade policy changes in key markets and diversify their export markets and product offerings to mitigate risks and sustain growth, according to industry insiders.
There were positive signs in wood product exports since the fourth quarter of last year with many firms having export orders secured until the end of the first quarter of 2025, he added. However, he also warned of likely challenges due to rapid changes in trade policies in key markets and geopolitical tensions, requiring businesses to adopt flexible strategies in response.
“Another issue is that exports to the US account for over 50 percent of the sector’s total exports. While this is an advantage, it also presents risks. If businesses do not expand their exports to other markets such as China or the Middle East they could face risks associated with over-reliance on a single market.”
He urged firms to diversify their products and explore markets with which Vietnam has free trade agreements and also highlighted the need for them to enhance digital transformation in their production and sales through e-commerce channels which could significantly reduce costs and create a breakthrough for businesses.
Võ Tân Thành, Deputy Chairman of theVietnam Chamber of Commerce and Industry (VCCI), said wood industry achieved great success last year with exports of wood and wooden products reaching US$16.25 billion, up over 20 percent from 2023.
Of this, exports of wooden products alone are estimated at US$11.2 billion, a year-on-year increase of nearly 22 percent.
He attributed the growth to “the initiative-taking efforts of enterprises in seeking new markets, actively participating in exhibitions and fairs and capitalising on recovery signals from major partners like the US and Europe.”
Exports on a strong footing
Vietnam plans to raise the export target for wood and timber products to US$18 billion in 2025 from the US$16.25 billion in 2025 according to the Ministry of Agriculture and Rural Development (MARD).
The target was set with markets such as the US, China, Japan, South Korea and the European Union all recovering, thereby boosting purchasing power. Production and export of the wood and wood product has been expanding since the beginning of the year according to some company leaders.
Tran Lam Son, CEO of Thien Minh Furniture Company, said orders, mainly from the EU and the US have increased sharply since the middle of the last quarter.
Son continued “transport often accounts for a large part of the production cost, thus, to maximise efficiency the Handicraft and Wood Industry Association of Ho Chi Minh City has recently gathered export enterprises, calculated market demand in each market, negotiated freight rates with shipping lines to get the best prices and increased competitiveness for Vietnamese wooden furniture manufacturers.”
If there are no unexpected fluctuations, the wooden furniture and interiors industry can continue to achieve export growth of 20 percent, and many enterprises have even set a growth target of 20-30 percent”, Son said.
According to MARD of the 15 main export markets the export value of wood and wood products increased the most in Spain, with an increase of over 63 percent year on year. In addition, certain export products increased well, such as wood chips (up nearly 38%), as well as timber and wood products (up over 20%).
Phung Quoc Man, Chairman of the Handicraft and wood industry association of Ho Chi Minh City (HAWA), said, “the global furniture market is valued at more than US$516 billion while the exports of Vietnamese enterprises is only US$16 billion. This indicates that the industry has a lot of room for development, but competition will also be fierce.”
Tran Quang Bao, Director General of the Department of Forestry, said the Department aims to promote Vietnam’s Timber Legality Assurance System, strengthen links across the supply chain from forest growers to processing and export enterprises and support businesses in engaging in international trade fairs to both secure contracts and boost Vietnamese wood products.
Japan
Recovery in business spending
The economy expanded an annualised 2.8 percent in the 2024 October-December quarter according to Cabinet Office data backed by a recovery in business spending.
The positive figures will likely support the Bank of Japan's plan to keep raising interest rates and normalise monetary policy.
While the latest wage and household spending indicators showed encouraging signs analysts are anticipating price pressures will delay a full recovery in personal consumption in the short-term.
In mid-February the government maintained its view that the Japanese economy is recovering moderately but noted that consumer spending has yet to fully pick up. There was also a mention that US tariff threats, if implemented, would slow export growth.
Exports were supported by strong shipments to Asia, driven by solid demand for production machinery in China and chip-manufacturing equipment in some other Asian countries.
The report also said "full attention should be given to US economic policies as a series of higher tariffs are planned on imports”.
Trend in machinery orders reverses direction
The Cabinet Office has reported the total value of machinery sales, excluding those for ships and by electric power companies, declined by 1.2 percent month-on-month in December 2024, the worst reading in four months.
The latest reading also reversed the 3.4 percent growth in November and defied market expectations for a slight 0.1 percent gain.
Orders from the manufacturing sector dropped 10 percent while non-manufacturing orders rose five percent. The biggest falls were seen in industries such as mining, quarrying, real estate, chemical products, information and communication electronics and pulp, paper and paper products.
On an annual basis, private-sector machinery orders increased 4.3 percent in December, slowing from a 10 percent surge in November.
In the period January-March 2025 the value of private sector machinery orders is forecast to fall.
Inflation rising at the fastest pace in 19 months
Government data shows core consumer inflation was recorded at 3.2 percent in January, rising at the fastest pace in 19 months, adding to expectations that the Bank of Japan (BoJ) will raise interest rates once again.
The year-on-year increase in the core consumer price index (CPI), which excludes fresh food prices, slightly exceeded a median market forecast for a gain of 3.1 percent and followed December’s rise of three percent.
A separate index stripping out costs of both fresh food and fuel, which is closely watched by the BoJ as a better gauge of demand-driven inflation, rose 2.5 percent in January from a year earlier the data showed.
China
Decline in 2024 sawnwood imports
According to data from China’s Customs, 2024 sawnwood imports totalled 26.74 million cubic metres valued at US$6.86 billion, a year-on-year decrease of four percent in volume but an increase 0.3 percent in value on 2023.
The average price for imported sawnwood in 2024 was US$257 per cubic metre, a year-on-year increase of four percent.
Of total sawnwood imports, sawn softwood imports fell seven percent to 16.63 million cubic metres, accounting for 62 percent of the national total.
The proportion of sawnwood imports fell about three percentage points year-on-year. The average price for imported sawn softwood was US$204 per cubic metre in 2024, up four percent year-on-year.
Sawn hardwood imports totalled 10.11 million cubic metres valued at US$3.48 billion, a year on year increase three percent in volume and five percent in value in 2023.
The average price for imported sawn hardwoods was US$344 per cubic metre, a year-on-year increase of two percent year-on-year.
Of total sawn hardwood imports, tropical sawn hardwood imports were 7.46 million cubic metres valued at US$2.14 billion, a year-on-year increase of eight percent in volume and 11 percent in value and accounted for about 28 percent of the national total, up three percentage points on 2023 level.
The average price for imported tropical sawn hardwood was US$287 per cubic metre, up three percent year on year.
Reasons for decline in China's sawnwood imports
The main reason was the reduction in domestic demand.
China’s Real Estate Production Index increased from October 2024 but remained sluggish which slowed construction and manufacturing industries leading to a decline in demand for sawnwood.
China's sawnwood output from domestic resources increased and the level of self-sufficiency improved such that dependence on imported sawnwood declined. The output of China's sawnwood has shown a steady growth in recent years.
According to statistics from the National Bureau of Statistics, China's sawnwood production was about 85 million cubic metres in 2018 and this increased to about 90 million cubic metres in 2019.
Although sawnwood output fluctuated in 2020 as a result of the pandemic it remained at about 90 million cubic metres. Sawnwood production further increased to about 100 million cubic metres in 2021 with economic recovery.
China's sawnwood production reached about 110 million cubic metres, a record high in 2022. China's sawnwood production in 2023 is also as high as 80 million cubic metres.
In addition, China has promoted the use of alternative materials and implemented the "bamboo instead of wood" policy, reducing the demand for sawnwood.
Another reason for the decline was that the price for imported sawnwood rose.
EU preliminary anti-dumping ruling on multilayer wood flooring
It has been reported that the European Commission has, in an announcement on 15 January 2025, made a preliminary anti-dumping ruling on Chinese multilayer wood flooring and imposed provisional anti-dumping duties.
Provisional anti-dumping duty for one company is 45.9 percent, for five companies 42.3 percent, two companies is 42.7 percent, for other enterprises the rate is 46.7 percent or 49.2 percent.
The product involved has the EU CN (Combined Nomenclature) code HS4418 7500 but does not include bamboo panels or panels with at least a top layer of bamboo (wear resistant layer) and flooring with Mosaic panels.
Tariff rates on imported wood products adjusted
China’s Tariff adjustment Plan for 2025 has been announced and China will adjust the import tariff rates on certain goods as of 1 January 2025 in an effort to expand domestic demand and advance high-standard production.
Provisional import tariffs lower than the most-favoured-nation rates will be applied to 935 commodities as part of the annual tariff adjustment plan. This plan will help increase the imports of quality products.
The tariff rates for imported wood products, including wood or bamboo charcoal, veneer, wood floor, fibreboard, plywood, wooden doors, wood formwork, wooden pallets, barrels and wooden tools, cork and cork products, bamboo and rattan products have been adjusted.
Under 24 free trade and preferential trade arrangements, conventional tariff rates will be applied to certain products from 34 countries or regions in 2025 as part of China's efforts to expand its globally-oriented free trade areas.
Among these, lower tariffs under the China-Maldives free trade agreement, effective 1 January 2025, will eventually lead to zero tariffs on nearly 96 percent of tariff lines.
China will also continue to offer zero-tariff treatment on 100 percent of tariff lines in 2025 to the 43 least developed countries with which it has diplomatic relations in a bid to support their development and foster mutual benefits.
Particleboard production capacity to exceed 70 million
It is forecast that total production capacity of particleboard in China could exceed 70 million cubic metres per year by the end of 2025.
48 particleboard production lines have been built and put into operation in 2024 in China with a new production capacity of 15.41 million cubic metres per year, the largest annual total production in the history of China's particleboard industry.
305 particleboard production enterprises in China had 329 production lines at the end of 2024 and these are distributed in 22 provinces and municipalities with a total production capacity of 64.15 million cubic metres per year and a net increase of 11.46 million cubic metres per year, an increase of 22 percent on the basis of the end of 2023.
China's particleboard industry showed a decline in the number of enterprises but the number of production lines, production capacity and average single-line production capacity continues to rise.
There are 30 particleboard production lines under construction in China with a total production capacity of 10.15 million cubic metres per year.
Seven regions in the country (East China, South China, Central China, North China, Southwest, Northwest and Northeast) have particleboard production lines under construction including 23 continuous flat pressing production lines with a total production capacity of 9.3 million cubic metres per year.
These account for 92 percent of the production capacity under construction.
Among the particleboard production lines under construction, there are four OSB (including multi-functional production line) production lines with a total production capacity of 1.5 million cubic metres per year which will be completed and put into operation from 2025 to 2026.
At that time the national OSB production capacity will further grow breaking through 19 million cubic metres per year.
China's particleboard industry has grown such that there is a risk of imbalance between supply and demand. Production to come on line in 2025/26 will lift total production capacity of China’s particleboard to70 million cubic metres.
EU
European furniture production falls to a new low
2024 was a challenging one for the European furniture sector. According to Eurostat data the value of furniture production in the EU27 fell three to four percent.
This followed an eight percent decline the previous year. Production in the EU last year was lower than in 2020 at the height of the pandemic.
Over past two years Europe has faced increased uncertainty, sluggish economic performance and a marked slowdown in the construction industry. As a result, European consumer demand for furniture has come under considerable strain.
Despite falling inflation European furniture consumption has continued to suffer from the erosion of household purchasing power, the propensity for consumers to save and the erosion of real financial wealth.
Consumers are also now more inclined to spend the disposable income that they do have on travel and eating out, activities precluded during the pandemic, rather than on furniture products which they invested in heavily during 2021 and 2022 in the wake of the Covid-19 lockdowns.
The costs of producing furniture in Europe also remained high in 2024. High energy prices, costs of capital and rising labour costs could not be passed onto customers, greatly reducing profitability.
Export market competitiveness was impaired and market prospects, particularly in the US, China and the Middle East, were cooling and not buoyant enough to support European production.
While the overall European trend has been sharply downwards, furniture sector performance has varied between European countries in recent times.
Eurostat data shows that while overall EU27 furniture production in 2024 was below the level prevailing in 2019, production in Lithuania, Poland, Spain and Italy remains above the pre-pandemic level. Production in the first three of those countries increased last year.
However, production in many other countries is now well below the pre-pandemic level and continued to decline last year, including in Germany, Sweden, Belgium, France, Romania, Netherlands and Denmark.
China drives rise in European furniture imports in 2024
Closer analysis of the data reveals that the recent growth in wooden furniture imports into the EU27+UK has been driven almost entirely by China.
Imports into Europe from China increased by five percent to 1.26 million tonnes in 2023 and were up by more than 35 percent to 1.53 million tonnes in the January to November period last year.
In contrast imports from tropical countries fell by 23 percent to 430,000 tonnes in 2023 and were up only six percent in the January to November period last year. Imports from all other countries (mainly non-EU European countries and Turkey) decreased eight percent to 590,000 tonnes in 2023 and increased by six percent to 570,000 tonnes in the January to November period last year.
Wooden furniture imports from China have increased both into the UK, the largest single wooden furniture importing country in Europe, and into the EU.
UK imports from China increased 13 percent to 417,000 tonnes in 2023 and were up another 16 percent to 445,000 tonnes in the January to November period last year. EU imports from China were up only 3% in 2023 to 833,000 tonnes but increased 44 percent to 1,090,000 tonnes in the January to November period last year.
Imports of wooden furniture from China increased very sharply into all the main EU markets last year including France (+35% to 236,000 tonnes), the Netherlands (+65% to 202,000 tonnes), Germany (+34% to 192,000 tonnes), Spain (+46% to 82,000 tonnes), Belgium (+65% to 71,000 tonnes), Italy (+28% to 59,000 tonnes), and Poland (+40% to 57,000 tonnes).
The rise in Chinese wooden furniture imports into European countries in 2023 and 2024 is partly explained by the fact that it followed a big decline in 2022 when Chinese exports were seriously impacted by rigorous lockdowns during the pandemic.
And while high production costs are impeding the international competitiveness of European furniture products, the competitiveness of Chinese products is benefiting from continual improvements in technical performance, manufacturing efficiency, quality management, and from increasing investment in advertising and marketing.
The accelerating pace of imports from China during 2024, at a time when underlying European consumption was slow, may also be related to EUDR as European importers were building stock before enforcement of that law was expected to begin on 30 December 2024.
The EU has now delayed the date of EUDR application until 30 December 2025 but that decision was only confirmed at the very end of last year.
The full impact of EUDR on EU imports of composite products like furniture remains to be seen but is likely to be very significant given the challenges of meeting the far-reaching traceability requirements.
