New regional trade deal gets closer
The Malaysian business community is excited over recent positive developments in regional trade. Although India pulled out at the last minute, 15 other countries—the ten member countries of the Association of Southeast Asian Nations (ASEAN) plus China, Japan, South Korea, Australia and New Zealand—agreed in Bangkok on plans for what could become the world's biggest trade agreement, the Regional Comprehensive Economic Partnership (RCEP). Countries aim to sign the agreement next year to start freeing up trade between members.
Few details have been released, but the agreement will progressively lower tariffs across many areas. Its backers say that, just as importantly, the agreement will let companies export the same product anywhere within the bloc without having to meet separate requirements and complete separate paperwork for each country.
The 15 participating countries make up nearly one-third of the world’s people (it would have been nearly half with India) and nearly one-third of global domestic product. India can join later, if it wishes.
Departmental restructuring underway in Sarawak
The Sarawak Forest Department is undergoing a restructuring. According to Director Hamden Mohammad, the restructuring will more clearly define the roles and responsibilities of the Forest Department and the Sarawak Forestry Corporation (SFC) in managing forest resources and conserving Sarawak’s biodiversity.
“As agreed, the Forest Department will regulate all forest areas in Sarawak in the aspect of management and operations, while SFC will manage the national parks and wildlife protection,” said Director Hamden.
In other news, talks are underway with Singapore for Sarawak to produce semi-finished furniture for companies based in Singapore.
“We are thinking of a dedicated furniture park for Singapore companies in Sarawak, so that you can get the raw materials that you need to produce good furniture. We can perhaps increase export of our furniture,” said Sarawak Chief Minister Abang Johari Tun Openg.
Plywood industry seeks help from State to address falling competitiveness
The Sarawak Timber Association (STA) plywood members and the Sarawak Timber Industry Development Corporation (STIDC) recently met to discuss issues facing the timber industry and how best the State government and STA members can work together to overcome these challenges.
One issue raised was the declining market share for Malaysian plywood in the Japanese market, the biggest market for Sarawak plywood. Participants at the meeting also noted that Sarawak is losing market share around the world to shippers in Indonesia, Vietnam and China who are more price competitive.
It was also noted that domestic logs are now more widely used for plywood production in Japan due to incentives offered by the Japanese government.
Over the past few years plywood production cost in Sarawak have risen due to increases in log costs and labour. It was stated that log cost have risen over 20 percent since 2017 because of increases in the Hill Timber Premium from RM0.80/cubic metre to RM50.00/cubic metre, increases in the Timber Premium (Rehabilitation & Development) from RM0.60/cubic metre to RM5.00/cubic metre; rising adhesive cost (+12%) and increased logistic costs per unit volume because of the reduction in harvest and hence production levels.
Added to this has been the rise in the minimum wage in Sarawak from RM9200 to RM1,100 per month in 2019. Also, from January 2018 employers are required to bear the cost of the levy for foreign workers at RM1,010 per worker. Previously, the cost was borne by employees themselves.
STA plywood producers reported they are unable to pass on the added costs to their buyers and that the only way the sector will survive is if the industry works with the authorities to restore the competitiveness of the industry.
Sarawak—one million hectares of planted forests by 2025
Sarawak Deputy Chief Minister, Datuk Awang Tengah Ali Hasan, said Sarawak will focus on planted forests and high value-added products for its timber industry in view of declining resources from natural forests. He also said the state was targeting one million hectares of planted forests by 2025 which will become the main source of raw materials for the timber industry.
He noted there was a 12 percent decline in Sarawak’s timber export revenues in the first three quarters of this year. Exports from the State were worth RM3.48 billion Between January to September this year, down from RM3.96 billion in the same period last year.
In the first three quarters of 2019 plywood, the state’s main timber export product, saw a 21 percent decline in export earnings to RM1.76 billion, down from the RM2.25 billion in the same period in 2018.
Japan remains Sarawak’s main plywood export market, worth RM1.7 billion between January to September this year but this is a year-on-year drop of around 13 percent. Other major markets are India (RM394 million), the Middle East (RM327 million), Taiwan (RM239million) and South Korea (RM193 million).
Timber industry ‘umbrella body’ for Sabah
The Sabah State Government is looking into setting up a platform where all timber players can come together with relevant State departments and agencies to discuss and plan the development of the industry, as well as seek solutions to issues affecting the sector.
This platform will serve as an umbrella body for the Sabah Timber Industry Association (STIA), Timber Association of Sabah (TAS), Sabah Furniture Association and Sabah Bumiputera Furniture Association.
Sabah, Chief Minister, Mohd Shafie Apdal, said the industry has considerable potential if it is well managed which will require commitment from the private sector and the State.
One country, three forest policies
Malaysia has three different forestry policies and sets of laws one for each of Peninsular Malaysia, Sarawak and Sabah and recently Dr. Xavier Jayakumar, the Federal Ministry of Water, Land and Natural Resources, has suggested there would be advantages in bringing all three forest policies into a common Malaysian Forestry Policy.
Dr. Xavier stressed that the suggestion did not mean that the ministry was considering amendments to any of the current policies as he knows forest policy is a matter for each State and the Federal government does not have any right to demand changes. The Minister invited all concerned parties to consider this so it can be discussed at a later date.
Log production predicted to grow by 15% next year
The Association of Indonesian Forest Concessionaires (APHI) estimates that log production will grow by 10–15 percent next year, both from industrial plantations (HTI) and natural forests, according to a report in Bisnis. APHI Executive Director Purwadi Soeprihanto said that the production of logs from natural forests this year is predicted at 5.4 million cubic metres and HTI production is estimated to be stable at 40 million cubic metres.
Chinese investors relocate furniture factories to Java
According to a report in TEMPO, Indonesia’s Investment Coordinating Board (BKPM) has indicated that 59 Chinese investors in wood and furniture businesses will relocate factories to Central Java.
The reasons given for the relocation include Indonesia's stable investment climate and the simple licensing process in Central Java.
US says trade preference talks to conclude soon
US Commerce Secretary Wilbur Ross said recently that a US review of a trade preference facility for Indonesia would conclude soon, and he predicted “far more investment” by US companies in Indonesia as a result, according to a report in TEMPO.
The USTR has been reviewing Indonesia’s eligibility for the GSP facility for more than a year due to concerns about market access for US goods, services and investment.
By retaining GSP and opening up more market access in both directions, Indonesia and the US aim to more than double their trade in the next five years to US$60 billion (up from US$28.6 billion in 2019), according to Indonesian Chief Economic Affairs Minister Airlangga Hartarto. “We want to open access for our furniture and textiles and we have programmes to import more cotton and wheat from the US,” he was reported as saying.
Association urges streamlined regulations
The Indonesian Furniture and Crafts Industry Association (HIMKI) has urged the government to immediately fix regulations that hamper the export of Indonesian furniture and handicraft products.
HIMKI Secretary General Abdul Sobur identified the Timber Legality Verification System (SVLK) as a particular obstacle, saying that it should not be required once the timber reached downstream industries such as furniture manufacture, if the upstream supply has already been verified as legal. Mr Sobur said that reducing regulations on exports was key to reducing Indonesia’s trade balance deficit.
Furniture exports down
The export performance of Indonesian furniture and handicraft industry products has stagnated in recent years, according to a report in Bisnis. The export value of industrial products made from wood and rattan was US$1.49 billion in 2018, down from US$1.63 billion in 2017.
The Director of the Forest and Plantation Products Industry of the Ministry of Industry (Kemenperin), Edy Sutopo, blamed this partly on logistics and a lack of attractive designs.
Indonesia's lightwood potential for export to Europe
During the fourth Indonesian Lightwood Cooperation Forum (ILCF) which involved stakeholders and academics from various universities, Marolop Nainggolan, the Director for Export Development Cooperation in the Ministry of Trade said Indonesia has the potential to meet the demand of lightwood for the international market, especially in the European countries.
Marolop urged the private sector and the universities to work together to determine what the market will accept and how to competitively manufacture products for export.
Government relief on VAT and SVLK for exporters
The government plans to provide some value added tax (VAT) relief as well as relief on legality requirements for wood products in order to boost exports. Indonesia’s Minister of Trade has reported that, on instructions from the President, he will prepare proposals for relieving some of the burden of SVLK certification which the timber industry has been requesting for some time.
The approach being considered is to require SVLK certification only of upstream segments of the timber industry and eliminate the SVLK requirement for downstream industries. Airlangga Hartarto, Minister of Trade indicated a revision of the VAT will be made for the benefit of wood product exporters. According to the Minister this new policy is intended to boost the competitiveness of the furniture industry.
The Ministry of Industry also plans to offer incentives for wood product exporters.
Forging links between furniture designers and manufacturers
The Ministry of Industry has launched a programme to encourage the development of the Indonesia’s furniture manufacturing sector. Abdul Rochim, Director General of Agro Industry in the Ministry of Industry said government support will focus on creative and innovative design concepts for the industry.
The programme will seek to bring together designers, for example those associated with the Indonesian Furniture Designers Association (HDMI), with businesses. An extensive support pack is envisaged covering compiling furniture design catalogues, conducting market assessments through prototyping and market intelligence.
Myanmar grapples with FLEGT
The Workshop to Formulate the Road Map on FLEGT was conducted in Nay Pyi Taw in early November involving the national and subnational members of the Multistakeholder Group and representatives of the EU and the European Forest Institute (EFI), according to the Forest Department.
Moreover, an EU representative was in Myanmar in early November amid uncertainty about the status of negotiations on the voluntary partnership agreement (VPA) between the EU and Myanmar. Myanmar’s Forest Law Enforcement, Governance and Trade (FLEGT) process with the EU began in 2015.
One exporter said that timber businesses were under pressure from two fronts: increasing difficulty in accessing the EU market, and declining harvest volumes. The exporter said the private sector was in a weak position to tackle market access issues.
According to a source close to EU importers, the European Timber Trade Federation recently sent an expert from NepCon (a non-profit organisation working to support better land management and business practices) to review legality issues in Myanmar.
The expert reportedly met with officials from several institutions, including the Forest Department, the Myanmar Timber Enterprise and the Myanmar Forest Certification Committee.
More foreign banks to operate in Myanmar
The Central Bank of Myanmar (CBM) will issue two types of licences—foreign bank branch licences and subsidiary licences—in the upcoming third round of licensing from 1 January 2020, according to a statement, as part of an initiative to open up the domestic banking market to foreign banks.
Nine foreign banks got the green light in 2014 and four in 2016, in which they are allowed to conduct onshore wholesale banking business. Branch licensees are allowed to establish one place of business only, and a minimum paid-in capital of US$75 million is required for operation.
First timber legality certificate issued
The Myanmar Forest Certification Committee (MFCC) has announced that the first MTLAS Legality Certificate has been issued providing details on the shipper, the type of products and species among other details.
Barber Cho, Secretary of MFCC, said getting to this point was the result of two-years of hardwork. Cho continued saying that the MFCC has built a reliable MTLAS with limited resources.
Over the past two years the Certification Committee and supporters compiled the certification standard and provided auditors training for certification bodies.
Currently, the MFCC recognises three certification bodies and will soon announce approval of others. The major challenge going forward is accreditation in Myanmar. The Department of Research and Innovation(DRI) under Ministry of Education is currently the official Accreditation Body but the DRI is not yet a member of the International Accreditation Forum (IAF).
The IAF is the world association of Conformity Assessment Accreditation Bodies and other bodies interested in conformity assessment in the fields of management systems, products, services, personnel and other similar programmes of conformity assessment.
Because the DRI is not accredited to IAF it has little international standing in the accreditation of Myanmar’s certification bodies. As an interim measure, MFCC has assumed the role of accreditation body but it is the priority of the MFCC to solve this accreditation issue as soon as possible.
With the issuance of the first MTLAS legality certificate, Cho, on behalf of the MFCC, put on record the gratitude to PEFC which provided assistance in the development of the legality certification process in Myanmar. The MTLAS process began in 2009 and the PEFC began to provide assistance in 2017/18 for which everyone in Myanmar is grateful.
The MTLAS is a uniquely Myanmar effort but has built upon the experiences of other countries and the PEFC expertise in building capacity in the MFCC, training auditors and introducing the PEFC chain of custody system. The MFCC looks forward to further cooperation with the PEFC to strengthen and promote Myanmar’s forestry and wood products sectors.
The MFCC anticipates that as soon as the accreditation issue is resolved the MTLAS certificates will benefit importers in the EU in meeting the due diligence requirements of the EUTR. Cho said he is well aware that there is much to do to overcome the concerns on allegations of corruption in Myanmar, on improving transparency and a host of other domestic issues of concern to the international community.
Memorandum of understanding with RECOFTC
Myanmar's Forestry Department signed a memorandum of understanding with RECOFTC (The Center for People and Forests) an international not-for-profit organisation that focuses on capacity building for community forestry in the Asia Pacific region.
The agreement is the second between the Forestry Department and RECOFTC. The organisations signed the first agreement in 2013. Since the beginning of the partnership, Myanmar has achieved important milestones in forestry. The most notable being the formation of a Community Forest National Working Group (CFNWG) in 2014 and the establishment of a community forest database.
Maung Maung Than, Director of RECOFTC Myanmar, said this agreement is an important milestone in the history of community forest development in Myanmar as it will continue to address challenges that face the country’s forests and the communities that depend on forests.
Work under the new agreement will focus on the development a plan for Myanmar’s Community Forest National Working Group. The working group aims to establish 14,000 hectares of community forest a year. The working group will also strengthen community forest enterprises.
Low demand, high taxes plague Kutch timber industry
Asia’s biggest notified Imported Timber Conversion Zone, in the district of Kutch (in Gujarat in western India), is struggling, according to a report in The Times of India.
A reduction in demand has forced several sawmills to cut production, and the high Goods and Services Tax (GST) and a depreciation of the rupee have eroded their margins. GST is applicable to any goods or services imported into or exported from India.
The rate of the GST on timber imports is currently 18percent. The Kandla Timber Association has requested a reduction in the rate of the IGST to five percent.
The upfront payment of GST and other expenses is a high imposition on the industry, which may take up to eight months to manufacture and sell the finished products using the imported timber (and thereby recoup GST outlays).
Nearly 70 percent of India’s timber imports go through ports in Kandla and Mundra. India’s largest timber cluster lies within 15 km of Deendayal Port, previously known as Kandla Port, stretching between Gandhidham and Anjar.
The Deendayal Port Trust’s plan to develop a furniture park in the region has hit a roadblock, with industry players reluctant to take up plots on lease due to high rent.
Amazon expands furniture range
Amazon India has expanded its range in the furniture category to over 160,000 products, especially from small and medium-sized businesses, ahead of the festive season, according to a report by Press Trust India.
Amazon, which has pumped billions of dollars into its Indian operations in the last few years, said its furniture business has grown by over 120 percent in the last year. Around 25 percent of furniture buyers use finance schemes, such as nocost equated monthly instalments (EMI).
More than 65 percent of Amazon’s sales are from customers beyond the big urban conglomerates in cities such as Nasik, Raipur, Vellore, Udupi, Kota, Kollam and Palakkad. Online marketing is also enabling small and medium-sized businesses in artisan hubs to sell their products to a nationwide customer base.
Exports, imports still growing
Vietnam exported wood and wood products valued at US$ 995 million in October 2019, bringing the total export value in the first ten months of 2019 to US$8.52 billion, up by 17.8 percent compared with the same period in 2018.
Combined, the US, China, Japan and the South Korea accounted for 80.6 percent of the total export value in the first 10 months of 2019. Vietnam’s exports of wood and wood products to the US grew by 11.5 percent over the period, to US$2.09 billion.
Vietnam imported more than US$2 billion of wood and wood products in the first nine months of 2019. China is the single biggest supplier, accounting for 22.9 percent of the total value (US$430 million), up by 41.4 percent compared with the same period in 2018.
The second-largest supplier was the US, with a total import value of US$258 million, up by 12.4 percent compared with the same period in 2018.
There was also a marked increase of imports from the Russian Federation from a relatively low base.
US investigates imported Vietnamese plywood
The import tariff on Vietnamese plywood in the US market is in range of 0–8 percent; meanwhile, the anti-dumping duty on Chinese plywood is 183.36 percent and the anti-subsidy tariffs for imported Chinese plywood are 22.98–194.90 percent.
The US Department of Commerce conducted an antievasion tax investigation in September 2018 against Chinese plywood products with an external veneer made from pine.
According to the Chairman of Binh Duong FurnitureAssociation, Mr Dien Quang Hiep, “Previously, China was always the biggest competitor of Vietnam in exporting plywood into the US. Now, as impacts of the US-China trade war, the US importers have to replace Chinese partners by others like Viet Nam. That is why Vietnam should take this advantage as a priority importing market of the US in future.”
As reported in the previous edition, the Vietnamese timber sector is concerned that the increasing gap in the trade of wood and wood products between Vietnam and the US will increase the risk of anti-dumping and anti-subsidy investigations, with potentially serious impacts on the Vietnam wood processing industry. This risk is becoming a reality due to possible practices involving Vietnamese and Chinese plywood manufacturers.
The US Customs and Border Protection has conducted an investigation into Vietnamese plywood imports.
Growing opportunities to forge new business links in the US
Vietnam’s exports of wood products increased significantly in the first nine months, most notably exports to the US rose by a third. The General Department of Customs has reported exports of wood products in September reached US$862.2 million, up 21 percent over the same period in 2018.
The cumulative value of wood product exports in the first three quarters of 2019 was US$7.52 billion, up nearly 18 percent over the same period in 2018. The United States, Japan, China, South Korea and the United Kingdom are the major export markets for Vietnam's wood and wood products.
Vietnam’s wood processing industry is taking advantages of US demand for wood products from sources other than China in an effort to minimise the impact of tariffs. Exports to the US topped US$3.64 billion between January and September this year.
Foreign investments surging ahead
According to the Foreign Investment Agency (Ministry of Planning and Investment) foreign investment into Vietnam in the first 9 months of 2019 was US$29 billion, up 4.3 percent compared to the same period in 2018. Of this, some US$16 billion has already resulted in new capacity being installed. 3,094 new projects were granted investment registration certificates, an increase of 26 percent year-on-year.
FDI flows from China and Hong Kong increase sharply in the year to September with investments from China doubling and those from Hong Kong quadrupling compared to the same period last year due, say analysts, mainly to the impact of the US-China trade conflict.
For the year to September the number of delegations visiting Vietnam was up 30 percent with most being from Japan, South Korea, China, Hong Kong and Singapore.
Concerns raised over raw material availability
Concerns have been raised over the rapid increase in wood chip production and export which, say analysts, could threaten raw material availability for the domestic solid wood processing industry. In response the authorities in Quang Nam Province are seeking the development of technical standards for forest management and harvesting for chip plantations.
In Quang Nam Province there are about 200,000 ha of plantations, mainly acacia. Most of this area is of small scale household plots and harvesting is done when the trees are around 3-4 years old. The harvested timber is chipped and shipped to China from Dung Quat Port.
Currently Quang Nam harvests about 1 million tonnes of acacia annually. There are 16 chip processing plants in the Province but there are fears that the local supply will soon be insufficient and that the chip mills will turn to neighbouring provinces such as Da Nang and Quang Ngai. Analysts point out that local raw material suppliers could be vulnerable should China introduce restrictions on imports.
There are more than 100 major wood processing plants In Binh Dinh and they are exporting to over 80 countries and territories. The wood processing sector contributes a lot to provincial development, but companies are finding it a problem to secure raw materials.
Every year local manufacturers import more than 200,000 cubic metres of wood raw materials of which sawnwood accounts for around 85 percent with the balance being logs and composite panels.
According to the Department of Industry and Trade, in the first nine months of this year, the Province's wood furniture manufacturing industry index rose by nearly seven percent year-on-year and the index for ‘other’ wood products jumped around 27 percent. In the same period, furniture exports reached over US$340 million, up 20 percent over the same period last year and accounting for 51 percent of the total exports of the province.
Mr. Le Minh Thien, Chairman of Binh Dinh Timber and Forest Products Association, said “despite the high export growth rates, the production of export wood processing enterprises in the province faced many difficulties in raw materials supplies. The local producers and exporters had to import more than 80 percent of raw wood materials with many risks about legality and origins”.
He pointed out that under these circumstances it is very challenging to manage production costs and maintain competitiveness in the global market.
In responding to these comments Ngo Van Tong, Director of Department of Industry and Trade, said there are plans develop large scale timber plantations forests in the province by 2025 to meet 50 percent of raw wood materials demand for the province's wood processing industry.
Investments in plantations would continue until they are contributing around 80 percent of the raw material requirements of factories in the province.
Hopes for growth pinned on domestic consumption
The Cabinet Office’s gross domestic product (GDP) figures show annualized 0.2% growth in the third quarter of 2019, far short of expectations. There could have been a decline if it was not for the surge in personal spending ahead of the October increase in consumption tax. The third quarter slowdown is in contrast to the 1.8 percent expansion in the second quarter.
Before the tax increase, consumers rushed to buy home appliances and daily necessities. Consumer spending accounts for more than half of Japan’s GDP, and any slowing of consumption would cast doubt on the Bank of Japan’s optimism that robust domestic demand will offset the impact of the global economic slowdown.
The disappointing news was that exports fell by nearly one percent, mainly because of a slowdown in machinery shipments to China.
Big spending on infrastructure to feature in supplementary budget
To speed recovery in areas hit by recent natural disasters and to cope with other risks to the economy, such as the China—US trade row and the UK’s exit from the EU, the government will earmark funds in a supplementary budget for fiscal 2019, which ends in March 2020.
This will be the first such financial package in three years, and spending on reconstruction work will address damaged roads, bridges, river embankments, homes and farming facilities. The local timber trade is already anticipating huge demand for wood products, and this could lead to a rise in plywood imports, which have fallen sharply this year.
Retail sales surge—furniture and home furnishing snapped up before tax hike
Department store sales in Japan soared 23 percent in September from a year earlier as consumers were out in force for lastminute shopping before the consumption tax was raised and this pushed up retails sales for the second consecutive month according to the Japan Department Stores Association.
High priced items were in demand and there was a doubling of monthly sales of art, jewellery and precious metals and furniture and home furnishing also sold well.
While the sales tax was one issue driving September sales, the huge year on year rise in September sales was partly because 2018 September sales were depressed due to the effect of a series of natural disasters according to the Association.
National pollution permits needed for wood industries
Nine industrial sectors—farm and sideline food-processing sectors; wine, beverage and refined tea manufacturing sectors; furniture manufacturing sectors; and water production and supply sectors—must obtain national sewage discharge permits by the end of 2019, and companies within these sectors much obtain certificates.
A failure to obtain permits within the timeframe will mean that discharges will be regarded as pollution without permits.
The following wood products enterprises need to obtain national pollution emission permits:
•wood-based panel manufacturing plants with an annual output of over 200,000 cubic metres; and
•sawnwood, woodchip processing, furniture manufacturing, bamboo, rattan, palm and grass products with a chemical treatment process or a painting process in an oil paint (containing diluent agent) of 10 tonnes or more.
Many timber processing plants in Guangdong cease production
Many timber processing plants in Guangdong Province have stopped or limited their production recently due to local environment protection policy and supervision and this will likely lead to a sharp rise in the price of construction timber in the domestic market.
November is the peak season for Guangdong wood processing enterprises and reduced production will cause delays in deliveries to construction projects. Timber processors are being encouraged to move to Huizhou (also in Guangdong Province), but many have not yet done so.
Efforts are being made to meet the shortfall from Belt and Road Initiative countries, but this is only a stopgap measure. Local analysts are telling traders they should exercise caution in signing contracts in Guangdong province to avoid large increases in production costs. At the same time, customers should place orders early to ensure adequate supplies.
Panel output in Guangdong province declined in the first three-quarters of 2019: plywood by four percent to 2.05 million cubic metres, mid- and high-density fibreboard by 0.5 percent to 3.09 million cubic metres, and particle board by 17 percent, to 1.59 million cubic metres over the same period last year.
Global wood products network to encourage green supply chains
Forest enterprises, timber associations, governments and intergovernmental organisations agreed during the recent forum “Together Towards Global Green Supply Chains—A Forest Products Industry Initiative” held in Shanghai from 22-23 October 2019 to create a voluntary network among forest managers, producers, traders, the processing industry and consumers to add value to forests through the recognition of their economic, social and environmental values and the incorporation of legality and sustainability in all forestry operations.
The Global Green Supply Chain (GGSC) Network, a Chinese private sector initiative, which will be maintained by a coalition of forest companies and other wood industry stakeholders committed to legal and sustainable supply chains, pledged to help build “a collaborative network of global green supply chain to promote the sustainable development of forest industries and contribute to the conservation and sustainable use of global forest resources”.
The Network is open to all interested parties worldwide, including stakeholders in producer countries, companies along the supply chain and consumer groups.
Value of China’s forest industry output set to rise
According to the State Forestry and Grassland Administration (SFGA) the output of high-quality forest products will increase significantly, the trade in forest products will expand and the total value of forestry industry output in China will increase by more than 50 percent.
Output of the main commercial forest products in 2025 has been forecast to be 250 million tonnes worth US$240 billion.
The total value of China’s forestry sector output in 2018 was RMB7.33 trillion and the value of China’s forest products trade reached US$160 billion. The forestry sector in China is making a significant contribution to the national economy.
Industry to face soaring logistics costs
The recent devastating collapse of the Wuxi overpass in Jiangsu Province has highlighted the problem of overloaded vehicles thought to be the main cause of the collapse. The authorities have begun a campaign to crack down on overloaded vehicles and trains.
Road and rail transportation is a critical cost centre for the timber industry and until now there has been little enforcement of transport regulations which has encouraged transport companies to exceed load limits in order to boost income.
Analysts point out that road transportation cost in Jiangsu Province have been rising fast and that many industries have come to rely on rail freight car transportation and will now face soaring logistics cost if load limits are enforced.
Regional furniture manufacturing centres
China’s main furniture manufacturing centres are distributed across four provinces, namely Guangdong, Zhejiang, Jiangxi and Liaoning Provinces.
The China Redwood furniture manufacturing base, the capital of China furniture materials, the first town of China furniture export and the famous town of China Classical furniture are in Guangdong Province.
The hometown of the China chair industry and China European style classical furniture manufacturing base are in Zhejiang Province.
The China metal furniture industry base is in Jiangxi Province and China wood furniture manufacturing base is in Liaoning Province.
Increased subsidies for timber enterprises
The Guangxi government has formulated a package of support to promote stable growth of ten major industries including iron and steel, nonferrous metal, cement, petrochemical, cinnamon wine, grain and oil processing, thermal power, wood processing, electronic information and repair and shipbuilding.
The financial support includes RMB200,000 to support enterprises as they increase their output value; RMB200,000 to support new projects and RMB100,000 to support enterprise participation in exhibitions and marketing activities.
Estimates suggest 70% of wood processing mills closed
Because of the new environmental regulations many wood processing mills in the Manzhouli, Suifenhe and Erlianhot areas have stopped production. Some have closed their business entirely while others have relocated and this has altered wood product distribution channels.
The focus of attention of the environmental regulators has, according to media reports, turned to cabinets and panel factories in 34 provinces, municipalities and autonomous regions. Nearly 3,000 panel factories in Wenan County, Langfang City, Hebei Province have been told to cease operation. This will seriously affect the domestic panel market and the jobs for the around 10, 000 employees.
At present, Hebei Province is investigating the many small scattered and polluting enterprises. Small panel factories are given the option of relocating or upgrading to satisfy the environmental regulations. It is reported that 1,274 panel enterprises were told to cease operation.
Local experts have confirmed that a large number of small and medium-sized panel factories across Jiangsu and Zhejiang Provinces have closed because they could not afford to retool or relocate.