Timber export earnings to reach RM17b
Starbiz, Friday, 16 July, 2004
By K.P. Lee
DESPITE the falling supply of logs, the export earnings of Malaysia's timber , industry are expected to grow between 5% and 6,°6 to more than RM17bil this year, from RM16.3bil in 2003, as downstream activities like furniture manufacturing continue to expand.
Plantation Industries and Commodities Deputy Minister Datuk Anifali Aman said that together with plywood, the wooden furniture sector would be among the "growth drivers" of the industry in the face of increasing costs and environmental challenges.
The export growth forecast for this year, however, is lower than the 6.9% figure achieved last year. Then, the wooden furniture and plywood sectors recorded export earnings of RM4.67bil and RM4.06bil respectively, and together accounted for half of all receipts from Malaysia 's timber industry exports. In the first quarter of 2004, the industry chalked up exports of RM4.2bil, compared with RM3.7bil in the corresponding period last year.
Anifah revealed the figures in Kuala Lumpur yesterday after opening the Malaysian Timber Council's (MTC) Marketing Seminar 2004 on behalf of Plantation Industries and Commodities Minister Datuk Peter Chin Fah Kui.
In his speech read out by Anifah, Chin said that in order to grow, industry players would need to venture into new markets like central Europe and the Middle East while also upgrading their capability to manufacture high-quality value added products.
Furthermore, supply chain links between downstream and upstream activities needed to be enhanced while benchmarking against better competitors should be carried out, he said.
Chin said the MTC, which undertook such a benchmarking study recently against Italian manufacturers, had found Malaysia 's wooden furniture industry to be lagging, with "serious deficiencies" in certain aspects.
Among the main shortfalls was the fact that Malaysian firms were largely OEM (original equipment manufacturing)-based and most of them lacked strategies to move towards ODM (original design manufacturing). In contrast, 73% of Italy 's furniture industry was ODM-based.
The reduced log supply, especially in Peninsular Malaysia due primarily to conservation measures, was another immediate concern, Chin said.
'The abundance of logs from the natural forest has long passed. We need to go into forest plantations of fast growing timber species on a large scale to ensure an adequate supply of 'timber," he said, adding that private sector investment had in this respect not materialized so far.
Currently, 270,000ha of forest plantations had been established, he said, but based on another MTC study, 2.8 million hectares were available for such plantations, of which 400,000ha were in the peninsula, 900,000 in Sabah, and 1.5 million in Sarawak .
Chin said there was also growing acceptance of the timber certification scheme designed by the Malaysian Timber Certification Council (MTCC). The scheme is meant to certify timber products obtained from legal and sustainable sources.
MTCC chief executive officer Chew - Lye Teng said that 45 companies had so far been issued with the Certificate for Chain-of-Custody, while 4.1 million hectares of permanent forest in seven states had been inspected by the council.
Although the MTCC certification had been rejected by some local and foreign non-governmental organizations for not meeting globally agreed criteria such as the Forest Stewardship Council (FSC) standards, Chew said it was the council's intention to move towards meeting those standards.
"We are targeting to switch over to the FSC standards next year," he said.
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