Tropical Timber Market Report(2024-3-4)

Recovery in China remains slow, while other regions are showing some promise after a weak 2023. ITTO tells us more about the latest market developments in Asia.


International Conference in Sarawak

Sarawak Timber Association with partners WWF Malaysia and the Sarawak Forestry Department organised a conference entitled “Preserving Tropical Forests through sustainable management”. The conference was supported by ITTO.


The following highlights two presentations:

Sarawak has reduced its timber harvesting operations to approximately two million cubic metres per year to balance the need for environmental conservation and economic considerations, said Hamden Mohammad the Sarawak Forest Department Director. He added that requirements on forest management certification apply to both natural and planted forests.

“We currently have 25 certified natural forests covering over 2.2 million hectares as well as seven certified forest plantations covering approximately 97,000 hectares” he told participants at the opening ceremony of the conference.

He added “the Sarawak government strongly believes that the economically viable, environmentally sound and socially acceptable responsible forestry practices are important to show the government’s commitment to maintain and enhance the best management practices.” 

He pointed out that Sarawak’s forest policy has undergone substantial reform with increased importance on environmental protection and the sustainable management of forest resources.

On a related subject, Hamden said Sarawak Forest Department partnered with the Sarawak Timber Association (STA) to develop seven handbooks on Reduced Impact Logging (RIL) aimed at aiding ground personnel in effectively implementing RIL practices. 

The guidelines mark a significant stride towards standardising timber harvesting practices and enhancing regulation within Sarawak’s timber industry.

Meanwhile, the Sarawak Timber Association is appealing to the authorities and policymakers to give full and continuous support to timber industry players who have made great sacrifices to ensure that their forest management units are certified.

STA chairman, Henry Lau, said this can be accomplished through the provision of transparent, consistent, sustainable and stable long-term policies, particularly those concerning government regulations and taxes, licensing as well as a sustainable long-term tenure.


Sabah’s carbon trade deal challenged

The controversial Nature Conservation Agreement (NCA) involving a two-million-hectare of State forest reserve for carbon credit trading cannot move forward as it has been deemed legally flawed.

The legal advisor to Sabah Government, Ahmad Fuad, said the Agreement does not conform with the Sabah Biodiversity Enactment 2000 which required all exploitation of biological resources to be first approved by the Director of the Biodiversity Institute and the Biodiversity Council.

The Agreement, signed in 2021 with Singapore-based Hoch Standard, fails to take into account the legal requirements that are needed to be obtained from the two bodies that oversee all conservation and sustainable use of natural capital, said Fuad.

Furthermore, he said, an approved ‘benefit sharing agreement’ with local people must be in place to guarantee that the native communities benefit. It is claimed the Agreement fails to provide guarantees to natives and community rights.


Economy grew 3.7% in 2023

Malaysia recorded a GDP growth of 3.7 percent in 2023 after an expansion of three percent in the fourth quarter of the year supported by continued recovery in economic activity and labour market conditions.

Bank Negara Malaysia (BNM) said growth moderated amid a challenging external environment last year following the strong growth of 8.7 percent in 2022. Exports, however, remained subdued due to prolonged weakness in external demand and the stronger imports.

In related news, with the Malaysian currency weakening close to a level last seen during the Asian financial crisis 25 years ago the government has ramped up its verbal support for the ringgit. 

The Malaysian currency has been under pressure from the strong US dollar and has suffered because of tensions in the Middle East and the attempted Russian invasion of Ukraine. 

In late February, the ringgit traded at 4.77 to the dollar, not far from the 4.885 level in January 1998. The Malaysian currency has declined by about four percent already this year.


Logging firm recognised

A Sabah logging company, Usahawan Borneo Greenwood, has become the first to receive Yayasan Sabah’s Appreciation Certificate as the Best Performing Partner of Rakyat Berjaya for Integrated Mosaic Planting in the Yayasan Sabah Concession Area (SFMLA 09/97). 

Yayasan Sabah Group Group Forestry Division Manager, Dr. Esther Li said this certificate is a way to recognise the company for their good performance and to motivate them to continue and at the same time, it is to encourage others involved.


Agarwood management

The Malaysian Timber Industry Board (MTIB) has been appointed as a Management Authority responsible for managing the registration of Scheduled Species for Planters (Karas) in Peninsular Malaysia and the Federal Territory under Act 686 (International Trade in Endangered Species of 2008).

Agarwood is also known as Karas in Malaysia. Currently, there are approximately 288 companies that have registered as Karas planters covering 2,706 hectares.

The MTIB recently held a Karas Tree Identification and Karas Plantations Auditing Workshop.

The objectives of the workshop were as follows:

•Updating the list of existing auditors and appointing new auditors

•Providing updates to officials involved in the auditing of Karas plantations of Act 686 in line with the amendment of the 2022 Guidelines for the Registration of Karas Planters

•Ensuring that the auditing process of Karas plantations is implemented more effectively


Freeze on foreign worker applications

The government is extending the freeze on new applications for recruitment of foreign workers. This is because the existing quota, along with the number of foreign workers to be legalised under a recalibration programme, is considered adequate to satisfy the demand for foreign labour according to the Minister of Home Affairs.

The duration of this quota freeze has not yet been announced. The timber industry, like many other industries, is dependent on foreign workers.

Employers have been given three months until the end of March to complete the legalisation process for their foreign employees. 

Of the 15 foreign labour source countries three countries are prioritised, Indonesia, Nepal, and Bangladesh which collectively provide 77 percent of Malaysia’s foreign labour.


More on Sarawak/Japan SFM collaboration

The Sarawak government, represented by Forest Department, has signed an agreement with the National Institute for Environmental Studies (NIES) Japan. 

The signing was held during a symposium entitled ‘Bilateral Collaboration Research Towards Sustainable Forest Management (SFM) in Sarawak’.

Following an MoU entered and exchanged in Tsukuba, Japan in the December 2023 between the Forest Department Sarawak (FDS) and NIES Japan the FDS headquarters in Kuching received an official visit from NIES researchers.

The MoA is to regulate research activities and obligations of the parties for the purpose of consultancy services on Forest Volume Modelling Using UAV Derived Metrics and Permanent Sample Plot.


Sabah Biomass Industry Policy

The Sabah State Cabinet has approved an Oil Palm Biomass Industry Policy and also decided to impose a State Sales Tax on biomass exports pending the implementation of the policy. The aim of the policy is to control exports of biomass.

The policy will be enforced within two years from the date of its approval (after the palm oil industrial cluster (POIC) Sabah Biomass Collection Platform is fully operational) and under the purview of the State Industrial Development and Entrepreneurship Ministry.



Ministry publishes EU market entry update

Didi Sumedi, Director General of National Export Development introduced an update on ‘EU Market Entry Requirements for Wood Sector’ at an event attended by more than 60 Indonesian timber businesses, business associations and representatives from related ministries/institutions.

Didi stressed the importance of staying updated on export market regulations as they constantly change. He emphasised all stakeholders must work together to anticipate these changes to boost the export performance of Indonesian wood products.

The event was a collaboration between the Directorate General of National Export Development under the Ministry of Trade and the Swiss Import Promotion Programme (SIPPO).

The objective was to inform on the regulations governing wood products in the European Union thereby promoting the acceptance of Indonesian wood products. 

Over the past five years, SIPPO has worked with the Directorate General of National Export Development to enhance the capabilities of businesses in the Indonesian forest sector through programmes, workshops and export market promotion strategies.

In related news, the HIMKI chairperson, Abdul Sobur, said that the impact of the European Union Deforestation-Free Regulation (EUDR) could reduce the value of Indonesian furniture exports to the EU. 

He said that the EUDR would pose a challenge to the entry of processed wood products from Indonesia into the European market due to strict raw material requirements. Europe, he said, accounts for a large share of Indonesian furniture exports at around 28 percent.

Sobur stated that the EUDR procedure, which involves due diligence for product traceability, makes it challenging for Indonesian furniture exporters to continue to ship to the EU. 

He added “HIMKI has over 2,000 members but not all can meet EUDR requirements”. He stressed that HIMKI is assisting furniture entrepreneurs understand the EU import regulations and urged the government to help companies prepare for the impact of EUDR.


Investors invited to revitalise wood processing

Indonesia is welcoming Chinese investors to support the revitalisation of wood processing in the industry. Acting Director General of Sustainable Forest Management at the Ministry of Environment and Forestry, Agus Justianto, stated that the revitalisation of industrial machinery will added further value to forest products. 

This was announced during an audience with the Indonesian Furniture and Craft Industry Association (HIMKI) and the China National Machinery Association (CNFMA) at the Indonesia International Furniture Expo (IFEX) 2024.

According to data from the Ministry of Environment and Forestry, sawmill and woodworking industries are comprised of 3,485 units, including 391 large-scale units (with a capacity of more than 6,000 cubic metres/year) and 3,094 small and medium-scale units (with a capacity of less than 6,000 cubic metres/year).

The total installed capacity of sawmill and woodworking industries was said to be 9.5 million cubic metre/year for large-scale operations and 10.5 million cubic metre/year for small and medium-scale operations.

Agus mentioned that the industry’s capacity utilisation rate is currently very low mainly due to the lingering effects of the Covid-19 pandemic and aging machinery. According to Agus, investor support, including that from China, is crucial for revitalising wood processing by introducing the latest technologies in processing. Further efforts are needed to secure financial support for implementing of machinery upgrading.


ASMINDO - Indonesia can be a hub for furniture development

The chairman of the Indonesian Furniture Industry and Handicraft Association (ASMINDO), Dedy Rochimat, said Indonesia has the potential to become a global hub for furniture development and production.

Indonesia boasts abundant natural resources, particularly in terms of sustainable raw materials, a rich culture, unique locally inspired furniture designs and is supported by the world’s fourth-largest population.

"This potential needs to be developed in synergy with all domestic stakeholders and through mutually beneficial international collaboration", he said.

He added that Indonesia is the world’s largest producer of rattan and ranks as one of the top three countries in bamboo resources.” He emphasised the necessity of promptly utilising and developing these potentials to positively contribute to the furniture industry’s role in generating foreign exchange and improving social welfare.

Rochimat said the demand for eco-friendly furniture is estimated to have reached 8.6 percent of the overall market and that demand for eco-friendly furniture presents a significant opportunity that must be collectively addressed by establishing research and production centres for eco-friendly furniture.

In a bid to promote eco-friendly practices, Asian furniture manufacturers have initiated efforts to encourage the utilisation of bamboo as a substitute for plastic.

This initiative aligns with the increasing trend towards environmentally friendly furniture products. The utilisation of bamboo was among the key topics discussed at the 25th Annual General Meeting of the Council of Asian Furniture Associations (CAFA).

The meeting took place in Tangerang in February and was attended by 32 delegations from CAFA member countries. The Association of Indonesian Furniture and Handicraft Industries (ASMINDO) hosted the meeting.


Indonesia should showcase GHG emissions reduction effort

Environment and Forestry Minister, Siti Nurbaya, underscored the need for Indonesia to continue to demonstrate, at the global level, its significant performance in reducing greenhouse gas (GHG) emissions supported by international assistance.

The Minister revealed that Indonesia had received support from various international communities to achieve climate targets, including collaboration with Norway for funding based on performance in lowering GHG emissions from reducing deforestation and forest degradation.

The Minister remarked that the first funding from Norway was used to support five activities in the forestry and other land use sector (FOLU) namely sustainable forest management, increasing carbon reserves, conservation, peat and mangrove management and information dissemination.

In a related development the Minister indicated that the Ministry was considering schemes to involve business actors in supporting funding for reducing greenhouse gas emissions and achieving the country's climate targets.

She said "the carbon business is not just about carbon trading but also about raising the reputation of a company." She remarked that companies looking to improve their reputation can be involved in the efforts to reduce emissions with the results contributed as an effort to achieve climate targets.

In a statement during the Workshop on ‘Result Based Contribution of Indonesia's FOLU Net Sink 2030’ the Minister reported that Indonesia's efforts to suppress the amount of greenhouse gas emissions generated have resulted in a decrease of 875.7 million tonnes of carbon dioxide equivalent based on data in 2022.


Papuan indigenous people's role in forest preservation

The Ministry of Environment and Forestry (KLHK), through the Papua Ecoregion Development Control Center (P3E), commended the role of Papuan indigenous people in preserving forests and the environment. 

The head of P3E in the Ministry, Edward Sembiring, said “local wisdom maintained by indigenous people has long been in line with the principles of conservation”.

He added that indigenous communities have a crucial role to play in protecting the environment and ecosystems from excessive exploitation. He explained that the success of the work plan to reduce greenhouse gas emissions by the forestry sector through Indonesia's Forestry and Other Land Use (FOLU) Net Sink 2030 Programme requires the support of indigenous communities.


Furniture and craft industries need to adopt advanced technologies

Competition in international markets for furniture and handicraft industries is getting tougher as Vietnam and Malaysia strive to expand market share. 

The Chairman of the Indonesian Furniture and Crafts Industry Association (HIMKI), Abdul Sobur, stated that given the state of the global economy it is very important to improve the competitiveness of the national handicraft and furniture industries.

According to him, one of the things that must be done to improve competitiveness of the national furniture and handicraft industry is adoption of advanced technologies. 

The HIMKI has asked the Ministry of Industry to provide subsidies for the rejuvenation of technologies in the furniture and handicraft industry in the country.

The HIMKI is optimistic that the wood processing industry can grow by five to six percent this year even though several main export markets such as the UK and Japan are facing economic downturns. 

Abdul Sobur, said that his Association has developed strategies to realise market growth and one aspect is exploring exports to non-traditional markets.

Japan and the UK have been one of the main markets for furniture and craft although the market share for furniture exports to the US is larger. 

Statistics Indonesia (BPS) noted that the value of furniture exports (HS 94) to Japan decreased from US$174.71 million in 2022 to US$141.15 million in 2023. Meanwhile, furniture exports to England also decreased from US$58.34 million in 2022 to US$45.76 million last year.


Support programme for machinery in wood processing industry

The Ministry of Industry is working to enhance productivity and competitiveness in the furniture industry. The sector's export performance in 2023 was recorded at US$1.8 billion. 

Moreover, the Industrial Performance Index (IKI) for the furniture industry stood at 52.4 in January 2024, which represented an expansion that suggests that furniture companies are confident about business conditions.

One of the efforts made by the Ministry of Industry is to continue the restructuring programme for machines and/or equipment in the wood and furniture processing industries.

The Director General of Agro-Industry, Putu Juli Ardika, said the Ministry is implementing a restructuring programme for machinery and/or equipment in the wood processing industry, in the form of providing partial reimbursement for purchases based on certain criteria.

Since 2022 twentyfour companies have participated in the restructuring programme for machinery and equipment used in the wood and furniture processing industry. Nine companies joined the programme in 2022 while 15 companies joined in 2023.

In 2024, the budget allocated for the restructuring programme for industrial machinery and equipment reached IDR7.5 billion and targets 10 companies.

According to one company's report for the 2022 fiscal year, this programme had increased the company's efficiency by 10-30 percent, improved product quality by 10-30 percent and increased productivity by 20-30 percent.


Ministry reports - deforestation down, sustainable forest utilisation up

The government continues to reduce deforestation and utilise forests in a sustainable manner, said Agus Justiant, adding "achieving a low deforestation rate is a key performance indicator for the forestry sector".

Data from the Ministry shows that Indonesia's net deforestation fell to 104,000 hectares in 2021–2022, down from 113,500 hectares in 2020–2021.

Justianto highlighted the government's ongoing efforts to transform forest utilisation through schemes like multi-business forestry which emphasises not just wood production but also landscape-based management. 

This integrated approach fosters increased land productivity by encouraging diverse forestry businesses focused on environmental products and services. The government is also expanding access to forest use not only to corporations but also to the community through social forestry schemes, he noted.


Private sector and community partnership for forest restoration

Companies holding Forest Utilisation Business Permits (PBPH) are encouraged to become responsible for environmental restoration by involving local communities through forestry partnership schemes.

"With good planning and good management sustainable forest management can provide benefits from economic, social and environmental-ecological aspectsaccording to Agus Justianto.

In early February, Agus visited PBPH PT Kandelia Alam in Kubu Raya Regency, West Kalimantan. Agus saw how the management of PT Kandelia Alam carried out mangrove restoration by involving the communities around the concession area.

Now the community also benefits from the involvement in efforts to restore mangroves and forest management, including the use of forest products such as honey and silvo-fisheries a traditional aquaculture system.


Five strategies to boost the furniture industry

Director General of Agro Industry at the Ministry of Industry, Putu Juli Ardika, said Indonesia still has great opportunities to develop the furniture sector because it is supported by the abundant availability of raw materials.

Among them are various types of wood including meranti, teak, mahogany and acacia. Efforts to downstream or increase the added value to natural resources need to continue to be encouraged to boost national economic growth.

Putu Juli Ardika said the Ministry of Industry is focused on implementing five strategic policies in an effort to develop a furniture industry that can be globally competitive.

These five steps include facilitating the availability of raw materials, facilitating the availability of skilled human resources, facilitating market improvement and strengthening market reference research, facilitating increased productivity, capacity and product quality as well as facilitating a conducive business climate and increasing investment.



Mandatory Quality Control Order on wood panels postponed 

In a news flash, Plyreporter says the Quality Control Order (QCO) for mandatory Bureau of Indian Standards (BIS) on medium-density fibreboard (MDF), particleboard and blockboard has been postponed for a year. 

The new date of implementation is 11 February 2025 according to a Ministry of Commerce notification dated 12 March. The wood-based panel QCO will be effective for small and micro industries from 11 May 2025 and 11 August 2025 respectively.


Focus on capital spending in recent budgets

The Indian economy performed well during 2023 and the National Statistical Office has estimated that GDP would be 7.3 percent during fiscal 2023–24. This is higher than the IMF’s December 2023 projected growth of 6.3 percent.

To drive growth the government has focused on capital spending in recent budgets and supported State governments to do the same. However, Biswajit Dharfrom the Council for Social Development suggests the private sector’s response to the government’s investment push has less than anticipated. 

Dharfrom says private investment has been declining and foreign investors reduced their participation in India.

The tepid response from private investors is concerning as the government will be unable to sustain high levels of capital spending while also addressing development deficits through spending on social sectors and welfare schemes, says Dharfrom.

GDP estimates show one area of weakness — the relatively slow growth of agriculture and allied sectors. These sectors grew by less than two percent in the 2022–23 which is half of their growth in the previous fiscal year.

Uncertain weather conditions, including uneven distribution of rainfall, adversely affected the performance of these sectors.

The National Statistics Office predicted that the manufacturing sector will expand by 6.5 percent in 2023–24, considerably higher than the 1.3 percent growth in the previous financial year. It is reported that output in the labour-intensive industries has declined.


Directive on land for tree plantations raises concerns

In early March the central government released a directive for tree plantations under the Green Credit Programme (GCP). The guidelines require Forest Departments to identify degraded land including open forests and scrub land, wasteland and catchment areas under their administrative control and make these available for tree plantations. 

Critics of this initiative fear that the directive appears to bring all forests and forest-like areas available for the GCP and that the clearing for plantations would lead to a loss of biodiversity.


Eased cross-state transport of forest products

The Ministry of Environment, Forest and Climate Change has introduced a National Transit Pass System (NTPS) as a ‘One-Nation-One-Pass’ to facilitate unrestricted transit of timber, bamboo and other forest products throughout the country.

India has many States and Provinces and until now transit permits were issued by different States based on their own transit rules which meant to move forest products separate transit passes had to be obtained for cross State transport (known locally as the ‘Jungle Pass’). This process was time-consuming and frequently caused delays in transport and production.

The new system will serve as a bridge between the rural and urban economy. Under the new system the QR coded transit permits will help check-gates across various states verify the validity of the permits and allow seamless transit. This new system will not only facilitate smooth transportation but will also help curb illegal wood transportation.


Federation recommends duty reductions for wood raw materials

The Federation of Indian Plywood and Panel Industry (FIPPI) has made several recommendations to the Finance Ministry and Department of Promotion of Industry and Internal Trade under the Commerce and Industry Ministry which it considers would boost the plywood and panel sectors.

The Union Budget presented on 1 February 2024 is viewed by industry as an interim budget with no major policy decisions on revision of customs duty, income-tax etc. It is expected that, after the upcoming elections, a revised budget will be presented.

The FIPPI currently represents around 3,300 small, medium and large manufacturers directly supporting around 1 million households and almost same number indirectly. The wood panel market in India is estimated to be valued at US$30 billion annually and over the last five years the segment has seen a CAGR of six to seven percent.

Almost 92 percent of the wood raw material used by these industries is sourced from Trees Outside Forest /private Agro-forestry.

An estimated one million farmers are engaged in TOF/Agro-forestry plantation production suppling raw material to the plywood, wood-based panel and paper industries. To sustain this vital Agro-Forestry production it has been suggested to the government that efforts are needed to integrate log production with wood-based industries.

The wood-based industries depend extensively on these domestic raw material producers and are sustaining support to farmers and other log producers through remunerative prices for their logs. The FIPPI recommendations to the government include the following:

•HS Code: 4403 - reduce the basic import duty on timber imports to zero percent from five percent

•HS Code: 4407 - reduce the basic import duty on sawn timber to 0% from 10 percent

•HS Code: 4408 - reduce the basic import duty to zero percent from 10 percent on face veneers used for manufacturing plywood.

•To increase import the duty by 2.5 to 3 times for finished products such as particleboard, MDF, plywood, fancy plywood and veneered decorative plywood that fall under HS Code 4410 to 4421 from 10 percent to 25-30 percent

The correspondent concludes saying “the government and manufacturers are trying to fulfil the Prime Minister’s aim of the self-reliance/make in India project so all the new regulations, such as from the Bureau of Indian Standards and recommendations made by the FIPPI to increase import duty on semi-finished and finished products will support the aim of the government. At the same time the recommended changes will not affect those sectors which are dependent on imported raw material”.


National certification an alternative to foreign schemes

The Indian Forest and Wood Certification Scheme (IFWCS) will offer an alternative to the private foreign certification agencies that have been operating in the Indian market for the last two decades.

The IFWCS intends to offer SFM certification for Trees Outside Forests similar to that for plantations including a chain of custody system to guarantee the traceability of timber along the supply chain. The launch of the certification comes as new Standards for forest management will be mandatory for all forest divisions in the country.

Existing forest working plans have been updated to meet the newly-developed Indian Forest Management Standards that contain eight criteria, 69 indicators and 254 verifiers. These standards will be mandatory for all forest divisions in the country to implement.


7% GDP growth for next fiscal year

After a three-day Reserve Bank of India meeting Govenor Shaktikanta Das said the Bank projects gross domestic product for the coming financial year at seven percent as the Indian economy is making progress on a strong, sustained and transformative growth path.

On retail inflation, Das said the forecast is for 4.5 percent for the coming financial year assuming normal monsoon rains. That would be above the central bank's medium-term target of four percent. 

Das maintained the 5.4 percent projection for the current year is within the RBI's tolerance band of two to six percent.



Wood and Wood Product (W&WP) trade highlights

•According to Vietnam’s Office of Statistics W&WP exports to the Japanese market in February 2024 amounted to US$110 million, down 33 percent compared to January 2024 and down 23 percent compared to February 2023. In the first two months of 2024 W&WP exports to Japan earned US$273 million, up almost one percent over the same period in 2023.

•Vietnam’s W&WP exports to Holland in February 2024 reached US$15 million lifting the exports in the first two months of 2024 to US$32.6 million, up 120 percent over the same period in 2023.

•Vietnam’s exports of bed and dining room furniture in February 2024 soared to US$210 million, up 62 percent compared to February 2023. In the first two months of 2024 exports of these two categories of furniture earned US$474, up 90 percent over the same period in 2023.

•Vietnam's office furniture exports in February 2024 brought in about US$24 million, up 18 percent compared to February 2023. In the first 2 months of 2024 office furniture exports totalled US$53 million, up 35 percent over the same period in 2023.

•Vietnam's ash imports in February 2024 were 21,700 cubic metres worth US$5.8 million, down 42 percent in volume and 41 percent in value compared to January 2024. However, compared to February 2023 there was a decrease of 29 percent in volume and 27 percent in value. In the first two months of 2024, ash imports reached at 73,900 cubic metres, worth US$19.5 million, up 32 percent in volume and 34 percent in value over the same period in 2023.

•Log and sawnwood imports from the EU to Vietnam in January 2024 stood at 50,360 cubic metres, at a value of US$15.41 million, down 7.5 percent in volume and 12 percent in value compared to December 2023 but up 38 percent in volume and 44 percent in value compared to January 2023.

•Pine imports to Vietnam in February 2024 amounted to 35,200 cubic metres, worth US$8.1 million, down 39 percent in volume and 39 percent in value compared to January 2024. However, compared to February 2023, pine wood imports increased by 16 percent in volume and 24 percent in value. In the first two months of 2024, pine wood imports were 115,400 cubic metres worth US$26.4 million, up 92 percent in volume and 103 percent in value over the same period in 2023.

•Vietnam’s NTFP exports in February 2024 were valued at US$75 million, down 6 percent compared to January 2024, but up 32 percent over the same period in 2023. In the first two months of 2024, NTFP exports totalled US$154.75 million, up 51 percent over the same period in 2023.


Exports recovering but bottlenecks remain

According to data from the Department of Forestry (Ministry of Agriculture and Rural Development) in the first two months of 2024, the export value of wood and forest products is estimated to have reached US$2,68 billion, an increase of 47 percent over the same period last year.

The value of imports of wood and wood products in the first two months of this year is estimated at US$355 million, up 31 percent over the same period in 2023. The wood product trade surplus in the first two months of the year is estimated at US$2,465 billion.

Despite the positive trend in exports the timber industry is facing many challenges. Trieu Van Luc, Deputy Director of the Forestry Department said the impact of the conflict between Russia-Ukraine and between Israel and Hamas and shipping problems in the Red Sea is complex and unpredictable. 

In addition, global shows signs of slowing and consumers continue to tighten spending on non-essential products including furniture and wood products.

Adding to the challenges of the timber industries is the need to address the requirements in importing countries to ensure legality and ensure no forest degradation or deforestation.

A representative of the timber industry shared experiences on the difficulties and obstacles in importing wood raw material, processing and exporting wood products. 

Do Xuan Lap, Chairman of Vietnam Wood and Forest Products Association, said that in the US regulations on the origin of wood raw material are strict.

He said he was aware the US Department of Commerce is amending a number of regulations on anti-dumping and anti-subsidy investigations including ways to identify previously unrecorded subsidies such as export insurance, debt cancellation and tax advantages.

For the EU market, the EUDR will come into force this year said Do Xuan Lap and action is needed as Vietnam's regulations on determining the origin of wood are currently not specific. Another issue for the Vietnamese timber exporters is the decision by India to apply new Standards and there is insufficient time for manufacturers to comply.


Integration is a must

In 2024 the timber industry aims for US$15.2 billion in exports of wood and forest products of which wood product exports are set to be at US$14.2 billion, an increase of about six percent compared to 2023. 

Nguyen Tuan Thanh, Vice Chairman of Binh Dinh Provincial People's Committee said that to achieve the set goals the wood industry still has a lot of work to do. Currently, production costs are still quite high and there are risks in forest certification as well as traceability. A solution to raw material supply needs to be found.

On the business side it is necessary to focus on improving quality, investing in machinery and equipment and meeting sustainability requirements. Only then will goods be welcomed by customers in export markets. 

Acknowledging the opinions of authorities, associations and businesses the Deputy Minister of Agriculture and Rural Development, Nguyen Quoc Tri, further commented that the wood industry currently faces many difficulties and to solve these issues he requested that wood industry associations and businesses agree on the view that to improve product value supply chains must be fully integrated.

He added that, currently, wood processing enterprises do not have to measure carbon emissions but it is likely they will be required to do so soon. 

He asked how to reduce emissions and bring the highest value? To achieve this, he said enterprises need to proactively link with forest growers and to integrate. At the same time, businesses need to promptly provide information about regulations and share skills to avoid risks.

He emphasised “it is desirable that processing enterprises promote links with forest growers and forest owners to develop large timber forests. This not only benefits forest growers but businesses can also proactively source raw materials that are legal, certified, and originating."

Nguyen Quoc Tri acknowledged that there are very few direct exports as most go through intermediaries and as such the full value is not captured. 

He urged associations and businesses to get together to discuss this and find a solution.


Vietnam and US cooperation in combating illegal timber trade

Training has started as the work to establish a mechanism to identify and monitor the origin of wood and expand export markets. Vietnam has proactively implemented a host of measures to counter illegal timber trafficking over the past two years under an agreement with the US on fostering a more collaborative approach to combatting the illegal timber trade according to Director of the Forest Protection Department, Bui Chinh Nghia.

Addressing a training workshop in Hanoi for Vietnamese government officials on countering illegal timber trafficking, Mr. Nghia said Vietnam has reviewed financial incentives for the wood processing sector, enhanced customs supervision and inspection over imported timber and boosted cooperation with countries exporting wood materials to have control on the origin of wood raw materials.

Various workshops have been arranged and co-organised by attorneys from the Environment and Natural Resources Division of the US Department of Justice and the Forest Protection Department of Vietnam. 

A March technical workshop was the first in a series of workshops and discussions with Vietnam’s forestry, industry and non-governmental stakeholders held under the US-Vietnam Agreement to foster a more collaborative approach to combatting the illegal timber trade.

The agreement with the US was signed in October 2021 with the aim of strengthening control over the origin of wood products and wood supply chains, expanding export markets, improving forest management mechanisms and dealing with illegal wood exploitation and trade.


W&WP export target at US$16 billion in 2024

Vietnam has targeted earning US$16 billion from the export of wood and wood products this year given the prospects in certain markets according the Ministry of Agriculture and Rural Development (MARD).

Vietnam’s key markets include China, the US, Japan, South Korea, the EU and China. In the first month of this year wood and wood product exports to Europe saw positive growth. Those to the Netherlands fetched US$9.2 million, up five percent against December and almost double that in January 2023.

Wood exporters remain concerned about rising transportation costs as tensions in the Red Sea forced shipping lines to divert vessels to ensure safety. Transportation costs to the EU and the US have, however, begun to ease over the past few weeks. 

Chairman of the Vietnam Timber Forestry Products (VIFOREST), Do Xuan Lap, said transportation costs for a 40-foot container from Vietnam to the EU have come down to US$3,786.


Over US$50 million from first forest carbon sale

2023 marked a significant milestone for the forestry sector as Vietnam successfully sold 10.3 million forest carbon credits (10.3 million tonnes of CO2) for the first time through the World Bank for US$51.5 million according to the Deputy Minister of Agriculture and Rural Development, Nguyen Quoc Tri.

The sale was part of the Emission Reductions Payment Agreements (ERPA) in the North Central Region signed in 2020 between the International Bank for Reconstruction and Development (IBRD) and the Ministry of Agriculture and Rural Development.

In early August 2023, the World Bank paid the first ERPA instalment of US$41.2 million, the balance will be paid after the transfer of the carbon credits.

The Vietnam Forest Protection and Development Fund has received and disbursed all of the first payment so that six north central provinces can make payment plans to forest owners.

In addition to the number of credits sold, the Bank has confirmed the emission reduction results of the entire North Central Region for the period January 2018 to December 2019 amounts to 16.21 million tonnes of CO2 (equivalent to 16.21 million credits).

Deputy Minister Tri said that 2023 was a tough year for the forestry industry because of supply and demand chain disruptions, logistics problems, and bad weather conditions. However, he acknowledged the sector's efforts to overcome difficulties in the past year to achieve remarkable results.

According to the Vietnam Administration of Forestry, the country planted about 250,000 hectares last year, surpassing the yearly plan by two percent. 

The forest coverage rate was 42.02 percent, matching the target. The total revenue from all forest environmental services reached more than US$169 million.



2024 catalogue of national key industrial products includes wood

The State Administration for Market Regulation recently issued the’ Catalogue of National Key Industrial Product Quality and Safety Supervision’ (2024 edition). 

Wood products, such as wooden furniture and wood-based panels are included in the catalogue.

Wood-based panels in the Catalogue include blockboard, MDF, particleboard, plywood, impregnated adhesive film papered veneer, laminated wood flooring and solid wood composite flooring. Food related products such as disposable bamboo-wood chopsticks and wooden cutting board are also included.


Decline in wooden furniture exports

According to China Customs, wooden furniture exports in 2023 fell four percent to US$24.19 billion year-on-year. 

The US was the largest market for China’s wooden furniture exports and nearly 30 percent of China’s wooden furniture exports were to the US, up one percent over 2022.

China’s wooden furniture is exported to more than 200 countries and these markets are very diverse. The top five countries for furniture exports of more than US$1billion together accounted for only 53 percent of the national total wooden furniture exports in 2023.

China’s wooden furniture exports to UK in 2023 rose 15 percent to US$1.45 billion year-on-year. In contrast, China’s wooden furniture exports to Australia and Japan dropped 11 percent and 12 percent to US$1.44 billion and US$1.39 billion respectively in 2023.

China's wooden furniture exporters have encountered difficulties and challenges in recent years, resulting in a decline in wooden furniture exports in 2023. 


The main reasons were as follows:

China's wooden furniture exports are often subjected to barriers in the import countries especially those related to in anti-dumping, technical standards and environmental certification and environmental protection requirements are getting higher and higher.

Many countries have begun to implement strict environmental protection laws and regulations and have put forward higher requirements for raw materials, production processes and environmental protection treatment of imported wooden furniture. This drives up production costs and impacts competitiveness.

China’s wooden furniture enterprises are facing competition from shippers whose costs are lower.

With the fluctuations in the global economy the supply and demand has changed greatly and the furniture prices in some emerging markets such as India and Vietnam are relatively low which poses a competitive pressure on China’s wooden furniture exporters.

In addition, the production technology and management level of domestic wooden furniture production enterprises in China is not high resulting in low productivity and unstable product quality and these factors affect international competitiveness. 

China’s wooden furniture enterprises plan to respond by improving production technology and management, optimising the supply chain and strengthen brand building to enhance the competitiveness.


Decline in wooden furniture imports

According to China Customs, wooden furniture imports fell 13 percent to US$770.57 million in 2023. 

Italy, Germany and Vietnam were the top three suppliers of wooden furniture to China. Nearly 70 percent of wooden furniture from these three countries fell by13 percent, two percent and 11 percent, to US$343 million, US$113 million and US$74.6 million respectively in 2023. 

The demand for wooden furniture in the domestic market is said to be weak and opportunities for growth are limited.


Rapid development of China/Russia supply chain

A cooperation agreement has been agreed between the Timber Industry Association in Suifenhe City, Heilongjiang Province and the Federation of Timber Industries and Exporters in Primorsky Krai, Russia.

According to the agreement, the two sides will align with the basic principles of giving full play to the advantages of all parties, realizing complementary resources, matching mutual needs, voluntary win-win and common development, determine the establishment of partnership mainly in the wood industry raw material supply chain, establish a management meeting and communication mechanism from time to time, the association leads the exchange of visits between the two companies, build an industry exchange platform, and regularly carry out activities”.

In particular, the Russian Association discussed the possibility of the Association trading timber in the St. Petersburg International Commodity Raw Materials Exchange in Vladivostok and expressed its willingness to set up a branch in Suifenhe City to jointly promote commodities in China.

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