Malaysia
Wood-based sector facing a triple burden
The Malaysian Timber Association (MTA) has called for government intervention warning that the wood-based sector is facing a triple burden of higher taxes, rising diesel costs and foreign labour shortages which have eroded its competitiveness in global markets.
The Association also said the combined pressures are driving up costs and constraining production in the sector.
MTA warned that “this is no longer a cyclical challenge but a structural threat to one of Malaysia’s key export industries”, adding that decisive policy action now will determine whether Malaysia strengthens or surrenders its position in the global timber and furniture market.
MTA noted that Malaysia remains among the world’s leading furniture exporters and stressed that any prolonged disruption to the sector risks far-reaching economic consequences, including job losses, weakened supply chains and erosion of global market share.
It said the expansion of the Sales and Service Tax (SST), effective since July 2025 which removed the tax exemption for sawn timber, has resulted in cost increases across the entire value chain.
Sawn timber is now subject to a five percent sales tax leading to an estimated eight percent to 12 percent increase in downstream production costs due to a “tax-on-tax” effect from mill to finished products.
The Association urged the Ministry of Finance to reinstate the full tax exemption for sawn timber and recognise it as a raw material for construction materials to eliminate cascading cost and restore export competitiveness.
In addition, the industry is also grappling with elevated diesel prices. Given the industry remains heavily dependent on diesel it has no buffer against price volatility.
To mitigate the impact the MTA has proposed a targeted fuel support mechanism, including a subsidy quota and called for diesel prices to be capped to provide immediate relief and stabilise the supply chain.
At the same time, the timber and furniture sector continues to face acute labour shortages, with some mills operating at just 60 percent capacity due to delays in workers quota approvals.
MTA also said the industry faces escalating recruitment costs, including agent fees, levies, compliance, medical screening and accommodation. Together with a multi-tier levy system these are squeezing already thin margins, particularly for small and medium enterprises.
“These pressures are also limiting reinvestment in automation and long-term productivity improvements,” it added. The Association called for a fast-tracked and one-stop recruitment system to reduce delays and costs.
Fire resistant doors from oil palm trunk
A Malaysian company has been recognised by the Malaysia Book of Records (MBR) for developing the country’s first fire-resistant door made from oil palm trunk (OPT) biomass.
The MBR said the pioneering innovation transformed agricultural waste into a high-performance building material, marking a significant step forward in sustainable manufacturing and green construction solutions.
It noted that Malaysia, as one of the world’s largest palm oil producers, managed approximately 5.6 million hectares of plantations, which accounted for about 17 percent of the nation’s land use.
Furniture makers call for business-friendly policies
It has been reported that the Malaysia Furniture Council (MFC) has urged the government not to raise the minimum wage saying any further increase could add to cost pressures already weighing on the industry.
The government is expected to make a decision on whether to revise or retain the minimum wage after completing a review of the Minimum Wage Order 2024 by September this year. Representing about 760 members, the MFC is calling for more “business-friendly policies”.
The MFC also urged the government to adopt a more stable and consistent policy framework for foreign worker employment aligned with industry needs.
The appeal comes at a time of growing strain within Malaysia’s furniture sector which is facing what industry players describe as a “triple squeeze”, rising labour costs, weakening global demand and intensifying competition from regional manufacturers.
Since 2023 the export value of wooden furniture has appeared to stagnate around RM 9-10 billion annually. That can be traced back to the impact of some domestic and issues such as volatile global demand, shifting US trade policies and geopolitical tensions in the Middle East.
These have disrupted supply chains and pushed up input costs, particularly for upstream suppliers such as sawmills and particleboard manufacturers, said MFC.
Furniture Park to drive added value processing
A proposed furniture park aimed at strengthening Sarawak’s timber industry and attracting investment would be developed in Kuching before expanding to Tanjung Manis, said Deputy Premier Awang Tengah Ali Hasan.
He said the project, spearheaded by Sarawak Timber Industry Development Corporation (STIDC), had been approved under the 13th Malaysia Plan (13MP).
The furniture park initiative is part of the state government’s broader push towards strengthening downstream activities in the timber industry.
Awang Tengah said the Park could expand Sarawak’s furniture industry which remains largely small-scale and family-based despite abundant resources from both natural and planted forests.
Manufacturers face supply and energy crisis
The Malaysian manufacturing sector is facing a crisis due to the Middle East conflict with nearly 90% of companies reporting a direct impact or expected disruption within four weeks as of early April 2026.
The crisis, characterised by shipping disruptions in the Strait of Hormuz, rising energy costs and raw material shortages has caused over 74 percent of manufacturing firms to report production cost increases of at least 10 percent, threatening the viability of small and medium enterprises operating on thin margins.
The regional press has picked up on a press release from the Federation of Malaysian Manufacturers (FMM) which details the results of a recent survey which shows Malaysian manufacturers are grappling with severe supply chain and cost disruptions stemming from the ongoing Middle East conflict and prolonged blockage of the Strait of Hormuz and Red Sea shipping lanes.
The survey found that nine in ten companies are either already affected or expect to be within four weeks, with raw material shortages, skyrocketing logistics costs and tightening diesel supplies threatening production continuity.
Sectors producing food, household goods, packaging, chemicals and consumer products are particularly exposed, raising the risk of product shortages and export disruptions.
Production lines are at risk of stoppage, export orders are being cancelled and the financial capacity of manufacturers to sustain operations is under direct and accelerating pressure, said FMM.
It noted that Malaysia's manufacturing relies heavily on global supply chains, with 83 percent of companies sourcing over 30 percent of raw materials from overseas.
Disruptions across energy, freight, fuel and materials are affecting domestic supply chains, with knock-on effects on retail availability and consumer prices even if the conflict ended immediately, delays in restocking, insurance costs and contract renegotiations would continue to strain operations for months, according to the survey.
The survey highlighted that 69.5 percent of manufacturers expect raw material shortages within a month, while eight percent have less than two weeks of critical stock. Plastics, specialty chemicals, metals, food additives and rubber processing inputs are among the most affected, creating the potential for halted production in essential consumer goods and industrial products.
Energy and logistics costs have also surged, compounding operational stress. Nearly half of respondents reported industrial energy costs rising by 10 to 30 percent, while 22 percent said increases reached 30 to 50 percent and 12 percent experienced hikes above 50 percent.
Freight and logistics costs have also escalated sharply, with 53 percent of firms reporting 20 to 50 percent increases and 18 percent seeing costs jump more than 50 percent, often outside contract terms. Diesel shortages for domestic haulage further delay cargo movement and elevate transport costs.
The impact on output is already visible, 48 percent of companies have reduced production or suspended lines, while 52 percent are facing export disruptions including delayed shipments, order cancellations and buyer-initiated renegotiations.
FMM has said “the scale and breadth of disruption highlighted in this survey requires an immediate and coordinated Government response. The risk of production stoppage and export contraction is real and the window to prevent it is narrowing. FMM has identified twelve recommendations and calls on the Government to act on all of them without delay. They span fiscal and tax relief, energy and fuel supply, raw materials and supply chain security and logistics, ports, shipping and crisis governance”.
Forest harvest area reduced
Under the 13th Malaysian Plan to further protect the forests, the area of annual allowable cut (AAC) in permanent reserved forests (PRF) has been reduced to 890,000 hectares, down from 1,165,300 hectares in the previous plan.
Natural Resources and Environmental Sustainability Minister, Arthur Joseph Kurup, said the reduction of the area would positively impact forest conservation, sustainable forest management practices as well as the country’s economic and social needs.
Kurup highlighted that the forestry and agricultural sector contributed over RM6 billion to last year’s gross domestic product.
He said the Ministry was also working to reduce reliance on conventional logging and expand into sustainable forest-based eco-tourism. He said State Governments would be prioritised for the Ecological Fiscal Transfer for Biodiversity Conservation allocation to streamline online applications and payments for PRF entry permits for eco-tourism purposes.
Kurup also revealed that the Forest Research Institute Malaysia was also guiding rural communities on environmental conservation through training programmes and technical support.
“As a result of this guidance local communities will be able to manage, run businesses and activities that are based on eco-tourism and recreation in a more systematic, competitive and sustainable manner without compromising on the forests’ ecosystem,” he said.
Expanding global reach
Malaysia’s furniture industry is expanding its global reach by tapping into emerging, high-potential markets such as Chile as part of ongoing efforts to diversify export destinations, according to Malaysia External Trade Development Corporation (Matrade).
Matrade, in a statement, said Malaysian manufacturers continue to show resilience by adapting to evolving demand patterns and positioning themselves in higher value segments, supported by a focus on design, quality and sustainability.
According to Matrade, dining and living room sets remain the top-selling furniture categories in Chile with consumers showing a clear preference for solid wood products with premium finishes. Demand is also rising for “small living” solutions as urban spaces shrink, particularly for apartments under 40 square metres.
This has driven interest in multifunctional furniture such as extendable tables and sofa beds, Matrade indicated.
“Malaysian manufacturers have successfully entered the mid-to-high end market segment by offering high-quality solid wood furniture that balances premium craftsmanship with attractive pricing. It added that Malaysia is currently Chile’s 10th largest furniture supplier globally and the second largest among ASEAN countries.
Carbon pricing could begin this year
Malaysia’s planned carbon tax marks an important turning point in the country’s climate policy framework, say researchers with Kenanga Investment Bank (Kenanga Research).
The government has signalled its intention to introduce carbon pricing beginning in 2026, supported by the forthcoming Climate Change Bill (RUUPIN) that will provide the legal and regulatory foundation for the mechanism.
Malaysia’s carbon tax policy is progressing through a staged legislative process. The government first signalled the introduction of carbon pricing during Budget 2025, with enabling legislation expected to be introduced under the Climate Change Bill.
Current policy discussions indicate that the carbon tax could take effect in 2026 starting with iron, steel and energy sectors.
Indonesia
Calls for productivity-driven labour policies to strengthen manufacturing competitiveness
The Indonesian Furniture Industry and Craft Association (HIMKI) has called on the government to adopt productivity-driven labour policies to strengthen the competitiveness of the manufacturing sector amid growing geopolitical and economic pressures.
HIMKI Chairman Abdul Sobur emphasised that, while labour protection remains a fundamental principle in industrial development, it must be balanced with the need to improve efficiency, flexibility and global competitiveness.
He noted that Indonesia’s manufacturing sector is facing challenges, not only from global market conditions but also from domestic issues such as low labour productivity and rising production costs.
To address these challenges HIMKI is advocating flexible work policies based on productivity and output, incentives for companies investing in workforce training and technology and wage systems that incorporate performance-based incentives.
The Association also urged the government to strengthen workforce skills development programmes that are better aligned with industry demands.
Abdul Sobur added that the effectiveness of labour policies at the implementation stage is often influenced by public communication and industrial relations dynamics on the ground.
Indonesia opens carbon market to communities and businesses
Indonesia has introduced a new regulation opening its forestry carbon market to communities and private sector players in an effort to accelerate emissions trading and maximise the economic value of its tropical forests.
Through Forestry Ministry Regulation (Permenhut) No. 6/2026, companies are now allowed to offset greenhouse gas emissions by investing in forest conservation, sustainable forest management and ecosystem protection.
Forestry Minister, Raja Juli Antoni, said the policy marks a shift toward a more transparent and inclusive carbon market after years of slow progress. The regulation is also intended to ensure that local communities benefit directly from conservation efforts.
The Minister emphasised that Indonesia’s new forestry carbon trading regulation is designed to ensure greater transparency, accountability and trust in the carbon market. Through Ministerial Regulation No. 6/2026, the government aims to establish a clearer framework for businesses, local communities and international partners involved in forestry-sector carbon trading.
The minister highlighted that maintaining integrity in carbon trading is a top priority.
Industry welcomes new carbon trading regulation
Industry stakeholders have welcomed Indonesia’s new forestry carbon trading regulation, describing it as a major step toward strengthening the country’s carbon market and accelerating the green economy.
During a forum in Jakarta discussing the regulation’s implications, representatives from the government, the Indonesian Chamber of Commerce and Industry and carbon project developers said the policy provides greater certainty for the forestry carbon sector.
Business leaders emphasised that the success of Indonesia’s carbon market will depend on strong coordination and trust among stakeholders.
The regulation introduces clearer project developer criteria, carbon credit issuance procedures, participation mechanisms for international markets and stronger environmental and social safeguards.
However, industry players also urged the government to quickly issue implementing rules on project risk management and long-term investment certainty to encourage greater green investment in Indonesia.
In related news, the Association of Indonesia Forest Concession Holders (APHI) plans to expand forestry carbon projects by utilising 16–17 million hectares of natural forest within its concession areas, beyond the 16 carbon project pipelines it currently manages.
Purwadi Soeprihanto said the initiative is part of APHI’s response to the issuance of Minister of Forestry Regulation No. 6/2026 which regulates carbon trading through greenhouse gas emission offsets in the forestry sector.
He explained that some concession areas will continue to be used for timber production, while others have strong potential for carbon credit development.
Purwadi expressed optimism that forestry carbon trading could generate circular economic benefits for Indonesia’s timber industry, provided the resulting carbon credits remain competitive in the market.
He emphasised that carbon projects should not only focus on generating carbon units, but also on delivering social and environmental benefits.
This includes benefit-sharing mechanisms for local communities so that profits from carbon trading are distributed more broadly, as well as ensuring biodiversity conservation and ecosystem protection in project areas.
Studies to strengthen anti-corruption measures in the forestry sector
Indonesia’s Corruption Eradication Commission (KPK) is conducting two studies to strengthen corruption prevention in the country’s forestry sector, focusing on corruption risks in forest product trade and downstream processing, as well as vulnerabilities in the governance of forest area allocation procedures.
The initiative was launched due to the sector’s high strategic and economic value which KPK Deputy for Prevention and Monitoring, Aminuddin, said requires transparent, accountable and integrity-based management.
He emphasised that the KPK’s role extends beyond law enforcement to supporting systemic improvements in corruption prevention.
To carry out the studies the KPK is collaborating with the Ministry of Forestry, Ministry of Industry and Ministry of Trade on efforts focused on integrating data, aligning policies and strengthening supervision across the forestry supply chain.
Aminuddin stated that the collaboration is intended to improve regulations, oversight effectiveness and information system integration throughout the sector.
The studies are expected to be completed in 2026 and are intended to produce not only recommendations but also concrete implementation measures to improve forestry governance in Indonesia.
Indonesia recovers over US$21 billion in forest assets
President Prabowo Subianto announced that the Forest Area Enforcement (Satgas PKH) Task Force has successfully reclaimed State assets valued at approximately Rp370 trillion (US$21.65 billion).
He delivered this statement during an official handover event in Jakarta, emphasising that the recovered assets represent nearly 10 percent of Indonesia’s total State budget.
The president noted that this figure highlights the scale of potential losses caused by illegal occupation of forest areas.
Prabowo stressed that the recovery of these assets offers opportunities to accelerate national development, including upgrading schools, enhancing educational facilities and expanding basic infrastructure.
He also expressed appreciation to the PKH Task Force for its work in protecting state resources and reiterated that strong law enforcement is essential to safeguarding national assets and preventing future losses.
In related news, the Indonesian government has regained control of more than five million hectares of forest land previously used for palm oil plantations and mining operations marking a major step in enforcing forest protection.
Officials reported that since February 2025 the Forest Area Enforcement Task Force (Satgas PKH) has reclaimed over 5.88 million hectares from the palm oil sector and about 10,000 hectares from mining activities.
Furniture industries face rising costs and export barriers
Indonesia’s furniture and handicraft industries are facing mounting pressure from rising production costs and policy challenges that are not yet fully supportive.
Industry players are dealing with multiple issues at once, including higher energy costs, limited access to raw materials, operational disruptions and export regulations.
According to HIMKI Chairman, Abdul Sobur, these factors are interconnected and compound one another, creating real and immediate strain on businesses.
Labour-intensive downstream sectors such as furniture manufacturing are particularly vulnerable due to their reliance on exports, sensitivity to cost changes and limited ability to raise prices in competitive global markets. Without efficiency gains or stronger policy support, rising costs risk undermining Indonesia’s competitiveness.
Sobur emphasised the need for smoother raw material supply and better liquidity support while urging the government to adopt more targeted, sector-specific policies and reassess overly strict regulations that may hinder production and growth.
Furniture exports to reach US$3 Billion in 2026
Indonesia’s furniture industry is targeting a rebound in exports in 2026 aiming to surpass US$3 billion in sales after falling short of its 2025 target.
According to HIMKI Chairman, Abdul Sobur, the goal is not just short-term but part of the aim to restore a steady upward trajectory in exports.
The 2026 target of over US$3 billion (around Rp51.45 trillion) marks an increase from the 2025 target of US$2.9 billion, with actual exports reaching US$2.6 billion.
While the outlook for 2026 is considered promising, challenges remain. Recovering global demand offers opportunities for Indonesia to position itself as an alternative supplier, but the industry continues to face pressures from rising production and logistics costs, high interest rates and geopolitical uncertainty.
In the medium term, HIMKI aims to double exports to US$6 billion within next five years with 2026 serving as a consolidation period to rebuild momentum, expand markets and strengthen competitiveness.
Proposal for global distribution hubs
The Indonesian Furniture Industry and Craft Association (HIMKI) has suggested the establishment of marketing and distribution hubs.
HIMKI Chairman, Abdul Sobur, pointed out that conflicts, such as in the Middle East, disrupt supply chains, cause shipping delays and undermine buyer confidence creating structural shifts demand beyond normal market fluctuations.
He stressed that industrial resilience now depends not just on production capacity but on the ability to adapt to global uncertainty.
To address these challenges, HIMKI is focusing on diversifying export markets and developing alternative distribution channels. Key initiatives include establishing hubs in Europe, the US and Canada to shorten supply chains, improve market access and boost the competitiveness of Indonesian products.
Sobur emphasised that these efforts require government support through policy, financing and trade diplomacy. HIMKI views the current global pressures as an opportunity to build a more resilient, flexible and risk-adaptive industrial system.
Indonesia, Japan to boost forestry and carbon trading cooperation
Indonesia and Japan have agreed to strengthen their bilateral cooperation in forestry and climate-related sectors according to Indonesia’s Forestry Minister Raja Juli Antoni.
The partnership will focus on initiatives such as sustainable forest management, carbon trading and wildlife conservation.
The collaboration also aims to enhance conservation areas, promote knowledge exchange and increase private sector participation in the carbon economy.
Indonesia is offering investment opportunities through its Carbon Economic Value (NEK) scheme and voluntary carbon trading programmes.
The collaboration will be supported by projects with the Japan International Cooperation Agency (JICA), including the deployment of Japanese experts to assist in mangrove management.
Indonesia also encouraged further collaboration through the development of the World Mangrove Center and the implementation of the Joint Crediting Mechanism (JCM) scheme to advance shared climate goals.
Carbon and social forestry project integration
Indonesia is strengthening cooperation on carbon projects and social forestry through a strategic partnership with the Asia Forest Cooperation Organization (AFoCO).
The Minister of Forestry, Raja Juli Antoni, met AFoCO Executive Director, Park Chongho, in Seoul to discuss collaboration in carbon project development, land rehabilitation and community empowerment under social forestry programmes.
The initiative is part of Indonesia’s broader “green diplomacy” agenda and focuses on preparing carbon projects and certification in national parks and concession areas.
AFoCO praised Indonesia’s active participation since joining the organisation in 2019 and highlighted opportunities for international financing through its accreditation under the Green Climate Fund.
To strengthen coordination, Indonesia proposed placing a permanent representative at AFoCO headquarters and invited the organisation to support the management of 1.4 million hectares of Indigenous Forests, as well as improve early-stage funding access for social forestry communities.
Global furniture hub coming to Central Java
The domestic media has reported a global furniture company is building a factory in the Kendal Special Economic Zone (SEZ), Central Java.
The Kendal SEZ’s industrial facilities and business-friendly environment were key factors in the company’s decision to invest in the project which spans around 195,000 square metres.
Once operational, the factory will produce a range of furniture products targeting markets in North America, Europe and Southeast Asia as well as domestic Indonesian demand. At full capacity, the facility is expected to export 25,000 containers annually.
The factory, scheduled to begin operations by the end of March 2027, is also projected to create approximately 9,000 jobs, including 6,000 local positions during the initial production phase.
Diplomacy needed to address EUDR
Indonesia is being urged to strengthen its global diplomacy to reduce any negative impact of the European Union Deforestation Regulation (EUDR) on its export performance.
According to CORE Indonesia Executive Director, Mohammad Faisal, the policy acts as a non-tariff barrier such that the government should adopt a strategic diplomatic approach to safeguard national export interests and prevent disruptions to export revenues.
Faisal also highlighted that the Indonesia/European Union Comprehensive Economic Partnership Agreement (IEU-CEPA) could be leveraged to address these challenges and support exporters in meeting EUDR requirements, particularly in supply chain traceability.
He stressed the need for mutual cooperation, including technical assistance from the European Union to help developing countries comply with sustainability standards.
At the same time, the EUDR presents an opportunity for Indonesia to improve plantation governance by focusing on sustainable practices and increasing productivity through intensification rather than land expansion, ensuring long-term export competitiveness.
Center of Reform on Economics (CORE) focuses on research and consulting in the fields of economics, industry, trade, regional development and public policy.
India
Duty-free access for New Zealand softwood
It has been suggested that Duty-Free access for New Zealand softwood under the recently signed FTA may drive down prices, raising questions about long-term impacts on domestic log suppliers.
The Indian media has hailed the Free Trade Agreement (FTA) between New Zealand and India, signed in April 2026 as this will open trade opportunities with duty-free access for 100 percent of India‘s exports and lower tariffs for 95 percent of imports from New Zealand.
Mr. Agneshwar Sen, the Trade Policy Leader from Earnst and Young (EY India) said “India has secured this without compromising its most sensitive sectors. Dairy, edible oils, sugar, spices, onions and key agricultural commodities are explicitly excluded from India’s concession list, protecting domestic farmers and industry”.
Other sensitive products, such as apples, kiwis and Manuka honey, while not excluded, are protected through Tariff Quote Ratios (TQR).
TQR sets limits on the amount of product that can be exported and applies additional tariffs once those limits are exceeded.
However, over 54 percent of New Zealand products, such as wood, wool and sheep meat are duty free. Some have raised questions about the FTA‘s impact on domestic suppliers, especially softwood producers.
As domestic softwood production is minimal India relies on imports, importing around 85 percent of its softwood. New Zealand is one of the main exporters of softwood to India.
According to the Ministry of Commerce, in 2019 NZ pinewood imports were valued at around US$521 million. This dropped to US$381 million in 2020 due to the pandemic leading to a decline in imports until 2024.
In 2024-25, imports increased to around US$587 million. This is expected to be further amplified by the FTA, especially given the duty-free status of wood products from the start of the Agreement.
India’s softwood market has been estimated as growing at 11 percent annually and is projected to reach US$1.06 billion by 2032. This surge is driven by rapid urbanisation, construction requirements and furniture manufacturing.
Used frequently in plywood, softwood is a cost-effective choice for many plywood producers. However, plywood producers in many parts of south India say they primarily use domestic hardwoods such as rubberwood and Gurjan for plywood production.
According to the online marketplaces IndiaMart and TradeIndia, the current price of Indian softwood, varying by type of wood, ranges from around INR150 to INR1,200 per cubic foot. NZ Radiata Pine prices are said to be around INR500 per cubic foot.
Prior to the FTA, most softwood imports from New Zealand faced duties of around 5.5 to 11 percent, hence the higher price.
Given the FTA, further price declines are expected for imported pine making the sector even more price-competitive. Even if the shift is not immediate, the potential drop in imported softwood prices could gradually influence how manufacturers source materials, leading to altered market dynamics.
The Maharashtra Global Furniture City
Bharat Cluster Ventures Private Limited has signed a Memorandum of Understanding (MoU) with the State government of Maharashtra for the development of India’s first integrated furniture Park, the ‘Maharashtra Global Furniture City’ said the Association of Furniture Manufacturers & Traders.
This is envisioned as a world-class integrated industrial ecosystem that will empower MSMEs, reduce import dependency, create large scale employment, strengthen exports and position Maharashtra as a global hub for furniture manufacturing.
This MoU is not merely an agreement, it is a shared commitment to nation-building through organised industry, innovation and collaboration, according to the Association of Furniture Manufacturers & Traders.
Indian economy well placed to face impact of Middle East crisis
The Indian economy is seen to be relatively well-placed to face the impact of the Middle East crisis, according to the International Monetary Fund’s (IMF) latest World Economic Outlook.
The IMF revised upwards India’s growth projection for the current fiscal year to 6.5 percent, against 6.2 percent estimated earlier citing the strong momentum from last year as well as the fall in US tariffs on exports.
Inflation in India is expected to accelerate to 4.7 percent this year as the impact of low food inflation wears off. Last week, the World Bank raised India’s growth outlook to 6.6 percent compared with 6.3 percent estimated in October citing robust domestic demand and strong export performance.
At the same time Standard and Poors (S&P) cautioned that India is not immune to the effects of the war, which may be felt on household and businesses. It also said India is equipped to handle some strain.
Robust corporate balance sheets provide a cushion against higher energy prices. Banks have strong capital and profitability; India’s robust external position gives it buffers to absorb some shocks from a higher import bill.
S&P says they do not expect any immediate impact on ratings on the sovereign, corporates and banks. Even so, govt’s efforts at fiscal consolidation could also face temporary setbacks, the ratings agency said.
S&P projects a further weakening of rupee, in case oil prices remained high, which will also adversely impact the current account balance.
While estimating GDP growth of 7.1 percent with oil price at US$85 a barrel, it projected the expansion to moderate to 6.3 percent in case crude hovered around US$130 levels. In such a situation, it also warned of an adverse impact on corporate profitability and asset quality of banks.
Vietnam
Wood and Wood Product (W&WP) trade highlights
As of early May 2026, Vietnam's wood and wood product (W&WP) industry has been navigating a complex landscape marked by significant legal and trade-defence challenges in key markets.
Despite these hurdles, the industry has remained resilient, supported by a strategic shift toward market diversification.
While the U.S. continues to be Vietnam’s largest export market, exporters are actively expanding their presence in Japan, China, South Korea, EU and the Middle East, with approximately 45 new markets being targeted as a buffer against potential US tariffs.
Japan has shown particularly strong growth, becoming Vietnam’s second-largest export destination, with exports increasing by more than 23 percent over the past year.
China remains the third-largest market, driven by rising demand for Vietnamese wood chips, with imports increasing by around 3.5 percent annually in recent reporting periods.
Exports to Spain rose sharply by 63 percent due to strong market demand while Canada has emerged as an important market, especially for bedroom furniture products.
Vietnam’s hardwood and decorative plywood exports to the US are currently facing severe pressure, following the announcement of preliminary anti-dumping and countervailing duties exceeding 190 percent in March 2026. Final determinations are scheduled for May 2026.
According to statistics from the Vietnam Customs Office, W&WP exports in April 2026 reached US$1.43 billion, up three percent compared to March 2026, but down one percent compared to April 2025. Of this total, WP exports accounted for US$941.7 million, increasing by five percent month-on-month but decreasing by four percent year-on-year.
Overall, during the first four months of 2026, W&WP exports totalled US$5.4 billion, up 0.4 percent compared to the same period in 2025. WP exports contributed US$3.5 billion, representing a decline of five percent year-on-year.
Vietnam’s wooden furniture exports in April 2026 were valued at US$822.4 million, up three percent compared to March 2026, but down 6% compared to April 2025.
In the first four months of 2026, total wooden furniture exports reached US$3.1 billion, down six percent compared to the same period in 2025.
Vietnam’s imports of raw wood (logs and sawnwood) in March 2026 reached 601,109 cubic metres, valued at US$204.5 million, up 58 percent in volume and 58.8 percent in value compared to February 2026.
Compared to March 2025, imports increased by three percent in volume and 15.0 percent in value. Overall, during the first three months of 2026 raw wood imports totalled 1.6 million cubic metres, worth US$542.7 million, representing increases of 11 percent in volume and 20 percent in value compared to the same period in 2025.
Vietnam’s non-timber forest product (NTFP) exports in March 2026 were estimated at US$83.37 million, representing a significant increase of 50 percent compared to February 2026 and an increase of six percent compared to March 2025.
In the first three months of 2026, total NTFP exports reached US$239.18 million, up 14 percent over the same period in 2025.
As of early May 2026, Vietnam’s wood and wood product industry is targeting total exports of approximately US$18 billion for 2026.
In the first quarter of 2026, exports were estimated at around US$3.95 billion, representing a modest increase of approximately one percent compared to the same period in 2025.
Stronger demand from China, Japan and the EU has helped offset weaker demand from the US market, while many enterprises have reportedly secured export orders through August 2026.
The Vietnamese Government plans to initiate negotiations in June to transfer more than five million forest carbon credits to the non-profit organisation Emergent at a minimum price of US$10 per credit. These credits are generated from projects implemented in Vietnam’s Central Highlands and South-Central regions.
To maintain timber exports to Europe, Vietnam is accelerating the completion of provincial forest boundary databases and forest mapping systems to ensure compliance with the EU Deforestation Regulation (EUDR) before the end of 2026.
In addition, beginning in 2026, Vietnam has been deploying advanced technologies including Artificial Intelligence (AI), big data and cloud computing to monitor forest changes through satellite imagery and strengthen forest governance and traceability systems.
Vietnam boosts shipments to Europe
The Vietnam Timber and Forest Products Association said that wood industry enterprises are accelerating exports to the European Union (EU) as demand recovers and EU partners increase orders.
According to Vietnam Customs, exports of wood and wood products reached about US$17.2 billion in 2025, up nearly six percent from the previous year, the highest level on record.
In addition to traditional markets such as the US, Japan and China, exports to the EU have shown positive signs, driven by rising demand for processed wood products and high-end furniture.
European orders maintained a positive trend in the first months of 2026. Many wood exporters are ramping up shipments to the European market.
As EU demand rebounds, Vietnamese enterprises are boosting exports and front-loading shipments ahead of traceability requirements while investing in supply chain digitalisation and raw material transparency.
US - 196% preliminary duties on Vietnamese hardwood plywood
The US Department of Commerce issued preliminary antidumping duty rates of 196.14 percent on hardwood and decorative plywood imports from Vietnam in February this year, one of the steepest trade barriers imposed on any wood product category this decade.
Chinese hardwood plywood faces a 187.27 percent rate, while Indonesian exporters suffer rates ranging from 19.98 percent to 84.94 percent, according to the Federal Register notice published in March.
These antidumping duties stack on top of countervailing duties announced in January: 4.37 percent to 26.75 percent for Vietnam, 2.40 percent to 128.66 percent for Indonesia and a country-wide 81.34 percent rate for China.
US Customs and Border Protection began collecting cash deposits in March meaning importers are already bearing these costs. Final determinations for Vietnam and Indonesia are scheduled for mid-July 2026.
What's Covered and What's Not
The investigations, petitioned by the Coalition for Fair Trade in Hardwood Plywood, target a specific product scope: hardwood and decorative plywood.
This includes veneered panels, furniture-grade sheets and decorative laminates used in cabinetry, flooring underlayment and interior fit-out.
Procurement managers should note that structural plywood products, including film-faced formwork plywood, construction sheathing and marine-grade structural panels, fall under different tariff classifications and are not subject to these particular orders.
Trade barriers reshaping sourcing
The combination of steep AD/CVD duties on hardwood plywood and Section 232 tariffs on softwood is fundamentally reshaping procurement economics for US importers.
With combined duty rates potentially exceeding 200 percent on Vietnamese and Chinese decorative panels, buyers will likely increasingly look to domestic production, alternative sources not yet subject to orders or reformulate their product specifications to fall outside the scope of the investigations.
For structural and formwork plywood, which remains outside these AD/CVD actions, the trade environment is comparatively stable though Section 232 baseline duties still apply.
European demand offers steady growth without the tariff complexity, while Middle East and Indian infrastructure programmes continue to absorb volume.
Procurement teams should closely track the mid-July final determinations, as duty rates may shift significantly from preliminary levels.
Exporters report strong order growth
Despite ongoing global uncertainties Vietnamese exporters are reporting strong order growth through the second quarter of 2026 driven by precautionary demand and supportive government policies.
However, contrary to earlier concerns, order volumes in the second quarter rose sharply as buyers stockpiled amid fears of prolonged geopolitical tensions, oil price volatility and shipping disruptions.
Company’s orders in Q2 have nearly doubled compared to the previous quarter. In the first quarter around 350 containers of goods, including timber and finished plywood were shipped.
As of 21 April, shipments already exceeded 500 containers for helping businesses maintain momentum. Lower interest rates, faster lending procedures and streamlined Customs clearance have provided tangible support for exporters.
Businesses expect continued efforts to cut red tape and strengthen support for small and medium-sized enterprises.
Navigating challenges and creating new opportunities
Vietnam’s wood industry is a vital component of the nation’s economy, consistently ranking among the top exporters.
The sector is evolving, focusing on sustainable practices and value-added products, while also navigating challenges such as trade tensions and tariffs.
With a commitment to sustainability and growing capabilities, Vietnam’s wood industry is poised for continued growth and innovation in the years to come.
Despite a strong export performance, Vietnam’s wood sector continues to face several structural and external challenges.
At present, the number one risk is policy direction in the US. While the US remains Vietnam’s largest export destination its recent policy developments have introduced new uncertainty manufacturers remain highly exposed to policy changes and trade barriers.
To counteract this the Vietnamese government has prioritised:
· Strengthening traceability systems through blockchain-based verification
· Expanding timber to ensure undisputed product origin and
· Diplomatic negotiations with US officials to prevent further escalation, particularly concerning compliance with the Lacey Act and anti-dumping regulations
These efforts are helping Vietnam’s maintain its reputation as a compliant and high-quality exporter, but the long-term solution lies in market diversification and innovation.
Rising competition from foreign investment enterprises
Competitive pressure is also increasing from domestically based foreign enterprises in Vietnam’s wood sector. These companies typically benefit from stronger technological capabilities, greater capital resources, advanced management practices and well-established international distribution networks.
As a result, domestic firms face growing pressure to upgrade productivity, product quality and corporate governance in order to remain competitive in global supply chains.
Structural constraints within the industry
At the same time, several internal constraints continue to limit the sector’s long-term competitiveness. Vietnam’s wood industry remains highly dependent on processing-based manufacturing, particularly under Original Equipment Manufacturer (OEM) models.
Limited research and development (R&D) capacity and insufficient investment in technological innovation contribute to relatively low productivity levels. In addition, product portfolios, export markets and industry segments remain insufficiently diversified.
Labour dynamics are also shifting. As Vietnam enters a new phase of economic growth, the wood sector is facing increasing difficulty attracting workers, as labour moves toward industries offering higher wages and improved working conditions.
Strategic diversification and future opportunities
Vietnam’s wood industry is rapidly diversifying in both markets and product segments.
In terms of geography, Vietnam is targeting:
· India, which is experiencing rising furniture demand, welcomes Vietnamese cooperation in trade and investment;
· Middle Eastern countries, where large-scale infrastructure and hospitality projects create opportunities for furniture and construction wood exports and
· ASEAN neighbours, where trade is streamlined through regional agreements such as the Regional Comprehensive Economic Partnership (RCEP).
Product diversification includes certified wooden toys and kitchenware for European markets, modular furniture systems tailored for compact urban housing, green-certified wood panels and composite materials for low-emission construction.
Digitisation is also accelerating with many companies utilising virtual showrooms, AR-enabled customisation tools and blockchain logistics platforms to connect with global customers and enhance transparency.
The future
Vietnam’s wood industry is no longer just a low-cost alternative. It is emerging as a global force in sustainable, high-quality and digitally enabled production.
The sector faces significant headwinds, particularly from shifting trade policies and rising environmental expectations. But its ability to evolve, through reforestation, FDI attraction, technological upgrades and market diversification makes it a model for transformation in the face of global change.
With strategic focus and coordinated action from government and industry, Vietnam is well-positioned to move from being the ‘world’s workshop’ to a sustainable wood powerhouse.
E-commerce: A growth avenue for the industry
Alongside traditional export channels, e-commerce is emerging as a promising avenue for Vietnamese wood exporters, particularly in the US market.
Retail platforms and furniture marketplaces enable manufacturers to reach end consumers more directly, expand market coverage and diversify sales models.
However, participation in e-commerce channels also places higher demands on supply chain operations, including on-time delivery performance, inventory management at destination market sand flexible order processing.
As a result, exporters must not only invest in product development but also build logistics capabilities that are aligned with cross-border e-commerce models.
In this context, integrated logistics solutions, covering international transportation, warehousing and domestic distribution in import markets are becoming increasingly important in supporting Vietnamese wood enterprises as they expand their global sales channels.
Looking ahead, Vietnam’s wood industry has significant growth opportunities with the US continuing to serve as the primary growth driver and e-commerce offering additional development potential.
In an environment of increasingly demanding market requirements, effective supply chain management will be a key factor in sustaining competitiveness.
Close collaboration between Vietnamese wood manufacturers and logistics service providers can help support export supply chains creating a solid foundation for Vietnamese wood products to access global markets.
Japan
Japanese group launches online timber market
A Japanese group of forestry organisations has launched an online timber marketplace to match forest owners in Japan with buyers nationwide.
Standing timber is typically traded through negotiations. In such deals, individuals who own forests and small forestry cooperatives often have to sell at depressed prices offered by companies with large financing resources.
The new platform was set up by the Tokyo-based group for promoting the use of domestic timber and protecting forests. It makes it easier for both sellers and buyers to find transaction partners from around Japan.
Organisers expect that transaction data accumulated on the site will facilitate the formation of market prices by conditions such as the tree species, volume and location.
China
Canada initiates anti-dumping/subsidy investigations against Chinese plywood
The Canada Border Services Agency (CBSA) has initiated investigations under the Special Import Measures Act in respect of alleged injurious dumping and subsidising of decorative and other non-structural plywood originating in or exported from China.
The investigations follow a complaint filed by Columbia Forest Products (CFP), Hearst, Ontario and the Canadian Hardwood Plywood and Veneer Association (CHPVA).
The goods subject to investigation fall under the following HS tariff classifications: 4412.10.00.00, 4412.31.00.00, 4412.33.00.10, 4412.33.00.20, 4412.33.00.30, 4412.33.00.90, 4412.34.00.00, 4412.39.00.10, 4412.39.00.21, 4412.39.00.22, 4412.39.00.23, 4412.39.00.90, 4412.91.00.00, 4412.92.00.00 and 4412.99.00.00.
The CBSA will investigate whether imports are being dumped and/or subsidised and will make preliminary decisions within 90 days of 10 April at which time provisional duties may apply.
Panel industry has entered era where human values become decisive
The ‘2026 Guangzhou Custom Furniture Exhibition and the ‘57th China Home Industry Fair’ (Guangzhou)’ was concluded.
One conclusion was that an industry direction has become clearer as eastern aesthetics infuses the board materials with cultural warmth, hardcore technology builds a solid health foundation, and humanistic care defines a new height of value.
For enterprises, only by embracing eastern aesthetics, delving into technology and reconstructing the value logic can they establish a firm footing in an industry under transformation.
For consumers, the future choice of board materials is essentially a choice of lifestyle, health needs and cultural preferences. There is no need to make trade-offs between environmental protection, appearance level and functionality.
The E1-level standard merely marks the beginning of an industry transformation. The competition for human value will be the ultimate battlefield of the industry.
Departing from Guangzhou, Chinese wood panel materials are moving from “Made in China” to “Created in China” and from “Material Suppliers” to “Life Style Service Providers”.
With the spirit of the East and the backbone of technology, they are creating a new global brand for Chinese wood panel materials and opening a brand-new chapter for the high-quality development of the industry.
China's exports of woodworking machinery and accessories - US$2 billion in 2025
As one of the world's largest suppliers of woodworking machinery and furniture accessory suppliers China's exports of woodworking machinery (including accessories) reached US$2.308 billion in 2025.
Of the total, the Asian market accounted for nearly 50%. Southeast Asia contributed over 60 percent of the growth in the Asian market becoming the driving force for exports.
Currently, the furniture industry in Southeast Asia is in a period of capacity expansion and equipment upgrading. As a result of the global shift in industrial production furniture production capacity is shifting from China, Europe and the US to Southeast Asia.
It has been estimated that the total investment in the furniture manufacturing sector in Southeast Asia reached US$131 billion in 2025, with a year-on-year growth of approximately 19 percent.
Most of the manufacturing plants in Southeast Asia are small and medium-sized enterprises and face problems such as outdated equipment and an automation rate of less than 30 percent.
They plan to update their equipment and at the same time raise the self-sufficiency rate of raw materials to lower dependence on imports.
Against the background of the reshaping of the global economic landscape and the persistent sluggishness of demand in Europe and the US, Southeast Asia has emerged as the major overseas market for Chinese enterprises in woodworking machinery, accessories and raw materials.
According to 2025 data, Vietnam, with its strongest manufacturing capacity, the most vigorous demand for equipment and materials and the most closely coordinated China-Vietnam supply chain has become the foundation of Chinese machinery and accessory suppliers.
In addition, Malaysia, Indonesia and Thailand constitute a diversified matrix for Chinese enterprises to go global in Southeast Asia.
Overall, Vietnam is the top priority market for Chinese woodworking machinery and accessory enterprises to expand their business.
The main reason for this is:
Vietnam, as a rising star in global furniture exports, has seen a simultaneous surge in capacity expansion and equipment renewal. It has the highest reliance on China's woodworking machinery, wood panels and accessories and Vietnam imports and growth rate rank first in Southeast Asia.
The Vietnamese furniture industry focuses mainly on low-end export assembly work, and this is highly compatible with the mid-range equipment and general materials available in China.
The cost for Chinese machinery exporters to adapt equipment for Vietnam is low and the two-way timber trade between China and Vietnam has further strengthened the synergy of the industrial chain.
Vietnam has a high dependence on products from China. Vietnam's imports of woodworking machinery and accessories from China reached US$420 million in 2025, an increase of 18 percent on 2024.
China became Vietnam's largest supplier of woodworking machinery in Southeast Asia. Among these, the import growth rates of high-end products such as automated panel saws, edge banding machines and CNC equipment exceeded 25 percent.
Analysts suggest in the short term, Chinese enterprises should seize the opportunity for equipment renewal by Southeast Asian furniture manufacturers, leveraging their cost-competitive advantages and the benefits of the RCEP policy to quickly capture market share.
In the medium term it was suggested enterprises could establish a regional value chain of “Chinese R&D + Southeast Asian production + global sales”, promoting product localisation and service localisation to reduce trade risks.
In the long term, they should rely on the growth potential of the Southeast Asian market to achieve an upgrade from product export to brand, seizing the initiative in the reshaping of the global furniture industry landscape and promoting the expansion of China's woodworking machinery and furniture industries.
Review of anti-dumping and anti-subsidy on Chinese forest products
According to an announcement from the US Department of Commerce, an annual administrative review of the existing anti-dumping and anti-subsidy tax measures for major imported wood products was initiated in March 2026 and the final results are expected to be released by January 31, 2027.
This re-examination covers the period from 1 January 2025 to 31 December 2025 and involves some Chinese hardwood plywood products and wooden bedroom furniture.
Regarding the re-examination of Chinese wooden bedroom furniture, the Ministry of Commerce in China has clearly stated that the submission of quantity and value responses, as well as supplementary information should be completed within 21 days after the notice is issued while the submission of individual tax rate certificates or applications should be completed within 14 days after the notice is issued.
The US has initiated the annual review of the anti-dumping and anti-subsidy measures for wood imports which will have a direct impact on the relevant exporting enterprises in China.
Companies failing to prove independence from state control are being hit with adverse facts available (AFA) rates. These measures are intended to support U.S. domestic producers against alleged unfair competition.
