New Timber in Myanmar, Costly and Uncertain

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A year-long ban on logging across Myanmar was lifted at the end of March 2017, and now the Myanmar government says it is on its way to bringing verifiably legal timber to the international market. During ban, MTE just operated upon existing stock of timber to meet demand, but the ban could not be effective completely as Myanmar authorities kept catching thousands of tons of illegal timber even during the duration of the ban. The timber kept entering China borders, processed and sold to business there on. So far, the Myanmar government has not released a detailed plan on how it will improve the documentation process to sufficiently mitigate the risk of illegality.

Now MTE is believed to be inviting ministers, MPs and civil-society organizations observe the whole process – from cutting down the trees to transporting – starting from the 2017-18 fiscal year with an aim to produce teak with credentials. The one-year national logging ban is now over, that has led various Indian companies to shut their factories and incur heavy losses who invested in Myanmar when Myanmar invited them to put up plants while ban was announced.

India is a significant importer of Myanmar timber products, and over 20 entrepreneurs have invested into timber manufacturing business there. MTE has started distribution of logs to peeling units though prices of fresh logs. Indian veneer peeling mills are hopeful to get sufficient quantity of logs for their smooth operation after April onward.

The sources say that the cutting of logs are going in full swing under the guidance of government authorities after lifting one year ban on logging. A veneer producer confirms that good quality fresh timber is there now, but at very high price. Although, the prices may dive down when supply will improve after March believe other producers.

With domestic wood production, businesses are still in their infancy. Myanmar’s income from timber exports has dropped dramatically in the wake of the ban. Myanmar is said to have lost an enormous 10.8 percent of its forest cover between 2010 and 2015, mainly due to illegal smuggle. The MTE, a state-run body that is meant to control Myanmar’s timber trade promise to eliminate the use of contractors in the timber harvesting process, which is certainly complicated for now.

“Ministry of Commerce statistics show exports in 2013- 14, the last fiscal year before the ban came into effect, were almost US$950 million (country’s top income earners). Last year in 2016-17, it dropped to $142 million, while only $90 million in exports is forecast for 2017- 18,” said U Aye Cho Thaung, Deputy General Manager of the state-run Myanmar Timber Enterprise.It is believed that extraction in 2017-18 will be far lesser than Annual Allowable Cut as usual. The Ministry of Natural Resources Environmental Conservation has allowed MTE to fell 50 percent of the AAC for teak and 30 percent for hardwoods, tells sources, and is creating a system to identify source of the timber that is cut.

The overall scenario in Myanmar do not look promising from the Indian face veneer requirement point of view. The dependency on Myanmar Gurjan has reduced and is expected to remain low because of growing acceptance of Okume, Makai, Reconstituted, PL and other species. The share of Gurjan face is already below 40 percent now of which a significant quantity is being supplied by Indonesia.

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