Wood Factories in Burma to Beat 2014 Log Export Ban
By William Boot 10 December 2013
With a ban on log exports set for next year, foreign buyers of Burmese teak and other rare woods are looking to open timber processing facilities inside Burma.
A new law coming into force on April 1 will prohibit the export of all raw tree logs, but it will not stop firms from processing timber in the country and then exporting it.
An Indian company and a Singapore-based business were given licenses last week by the Myanmar Investment Commission (MIC) to build wood-processing factories in the country. The names of the firms have not yet been announced.
In addition, two other Indian firms, Greenply Industries and Century Plyboards, have reportedly been seeking permits to build factories in an industrial zone in Dagon, Rangoon.
Century Plyboards plans to invest about US$10 million in a factory capable of producing 25,000 square meters of plywood a day, according to The Hindu newspaper.
“This project is important for the company as it would replace its import of timber from [Burma],” Century managing director Sajjan Bhajanka was quoting by the paper as saying. “Our plan is to bring veneers or plywoods to India.”
Burmese hardwoods, especially increasingly rare teak, are sought in Western countries and India and China in particular for furniture, house flooring and yacht decking.
It’s a lucrative business for Burmese traders. Legal exporters earned about US$600 million in the 2010-2011 financial year, according to government figures. However, cross-border illegal sales of raw felled timber to China, India and Thailand are believed to be much higher, say international environment NGOs.
The export ban on raw timber is supposed to help protect Burma’s declining forests and conserve sought-after hardwoods such as teak.
However, the magazine SuperYacht World said it understood that the export of processed teak will not be stopped and teak veneer, teak yacht decking and interior flooring and furniture parts will still be available.
“According to the authorities I spoke with, this ban…is only on the export of round logs which have previously been exported in large volumes to be cut in Thailand, India, Singapore, Malaysia, China and other countries for their domestic consumption as well as further exports,” Singapore businessman Bob Steber, managing director at Ginnacle Import Export, told the London-based magazine.
“The ban on round logs is intended to create more jobs internally for [Burmese] citizens,” he said.
The 2014 export halt is also a response to excessive legal harvesting of timber, made worse by illegal logging, Naypyidaw’s parliamentary Natural Resources and Environment Conservation Committee said earlier this year.
However, it’s hard to quantify how much timber is actually leaving Burma and how much deforestation has taken place, said the European Forest Institute (EFI) in a study.
“Figures for [Burma’s] forest products trade are unreliable, often contradictory, and do not include nonofficial exports, including cross-border trade, which has been substantial in the past especially along the Yunnan [China] border,” the EFI said recently.
Teak grows naturally in only a handful of countries in Asia and nearly 50 percent of the world’s remaining natural teak forest is in Burma, according to the website East by Southeast.
Up to 2005, Burma was estimated to be more than 50 percent covered by forest. But recent studies by the United Nations and other major international bodies say it’s now down to 46 percent or lower.
Two thirds of Burma’s rural population of 30 million “depend heavily on forests for their basic needs,” according to a UN Food and Agricultural Organisation report in 2009. Half a million people rely directly on forests for employment, it said.
Economic sanctions imposed until recently by the United States and the European Union had nurtured a large illegal logging industry, according to the Australian luxury yachts magazine Ocean.
“Experts say this is likely to continue since [Burma] is unable to marshal forces to combat illegal loggers. Once logged it is difficult to determine where the teak has been sourced from.
“Teak traders have evaded sanctions by shipping [Burmese] logs to neighbouring countries, which process the teak and sell it to the boat industry and other luxury wood-working industries in Western countries. India is by far the biggest market, followed by China, Thailand and Vietnam,” said Ocean magazine.
Teak timber is particularly valued in the boating industry for its durability, especially its resistance to water and rot.
Flora and Fauna International (FFI), which is documenting the rare and unique wildlife in Burma, says the country’s forests face “many and mounting threats” such as illegal logging.
“Despite their high dependence on natural resources, local people have been excluded from decisions concerning the country’s protected areas. Yet this situation is slowly changing. For the first time grass roots organisations are being established to address issues of environmental governance and human welfare.
“We are also offering guidance to state-run protected area management authorities on how to work alongside these grass roots organisations,” said FFI.
Until April, all unprocessed tree logs legally designated for export must bear a stamp from the state-owned Myanmar Timber Enterprise, but some environmental NGOs believe the monitoring system is so lax that it’s easy for illegal logs to be legalized with a stamp.
After April, policing of borders with India, China and Thailand will need strengthening if the illegal logging trade is not to increase, say the NGOs.