2. GHANA

  Millers seek improved business climate from new
government
On 7 December Ghanaians went to the polls and elected a
President from the main opposition party. The Association
of Ghana Industries and other private sector bodies are
calling on the new government to revitalise the business
sector making it possible for businesses to access finance
at reasonable rates to spur business growth.

Most observers say the opposition was successful as it
promised to reduce income tax burdens and widen the tax
net. The new President has also promised to stabilise the
currency and improve power supplies which has been a
major handicap for the manufacturing sector including
wood processing industries.

Third quarter 2016 exports 12% higher
Third quarter 2016 exports amounted to 302,085 cu.m and
earned Euro 72.71million.

Products that made a significant contribution to the
increases in volume and value of exports in the period
reviewed are shown below.

Air dried sawnwood topped the list of export products in
the third quarter 2016 accounting for 61% of the total
volume of exports. Exports of kiln-dried sawnwood fell to
37,840 cu.m from 46,981 cu.m in the same period last
year.

While the export data showed no change in the major
market destinations of Asia/Far East, Europe, Africa,
America and the Middle East, Asian markets accounted
for 73% of third quarter 2016 export volumes, up 15.08%
year on year.

Other major markets weakened in the third quarter
compared to a year earlier as can be seen in the grahic
below.

Teak, rosewood, wawa and ceiba were some of the leading
species which were shipped mainly to India and China.

Workshop on understanding the FLEGT licensing
process
The UK Timber Trade Federation organised a week-long
Trade Engagement Workshop in Ghana as part of its
programme to expand the understanding and appreciation
of the FLEGT licensing process in those countries
embarking on a Voluntary Partnership Agreement with the
EU.

During the event a number of British and European trade
representatives and associations gained an insight into
Ghana’s system of timber legality assurance system.

For more see: http://www.ttf.co.uk/article/ttf-mike-worrellorganises-
flegt-trade-engagement-week-in-ghan-460.aspx

3. SOUTH AFRICA 

  South African construction industry continues to face
tough times
The Pricewaterhouse Coopers (PwC) fourth edition of
‘South African Construction, 2016’ highlights some of the
trends in the construction industry. In a press release,
Andries Rossouw, writes “the tough economic conditions
in 2016 did not spare the (South African) construction
industry, with lower revenues, decreased spend on projects
and a long term industry settlement.” The press release
continues saying there was some improvement in company
performance in the later part of this year which has helped
profitability and market performance.

Other analysts suggest the longer term future of the
construction sector will be boosted through the
government’s National Development Plan and when
increased social infrastructure spending kicks in. An
additional boost for the medium term will be construction
work for the 2022 Commonwealth Games. However,
challenges will remain in the South African construction
industry and calls have been made for South African
companies to look for opportunities in other African
markets.

For more see:
https://www.pwc.co.za/en/press-room/sa-construction-industrycontinues-
to-face-tough-times.html

Domestic pine price index movements
Despite the up-trend in the pine price index, prices have
barely kept pace with inflation over the last few years.
There were extended strikes in August last year which
drained stocks at the mills and this helped prices stay firm.
Domestic pine is used mainly in structural end-uses so
demand is hostage to the construction industry/property
market which remains weak. The weaker Rand has also
protected domestic timbers from imports.

As the year draws to a close the manufacturing sector is
winding down for the summer holidays. Basically,
business will cease from the 16th December until the 16th
January.

4. MALAYSIA

  2017 likely to be tough going for the timber industry
Analysts expect Malaysia to weather the anticipated tough
times coming in 2017 underpinned by ongoing
implementation of infrastructure projects, possible early
elections, and pre-election spending. However the
strengthening of the US dollar against most currencies and
the ringgit is of concern.

According to RHB Research, the ringgit has weakened
over 6% since the US election results were announced on
November 8 and while there is an economic downside to
this it does help exporters remain competitive.

Incentives for SMEs explained
The Malaysian Timber Council (MTC) recently held a
workshop on ‘Cross-cutting Issues: Incentives for SMEs
and Bumiputra SMEs in the Timber and Furniture
Industry’.

This was part of the MTC’s efforts to assist the
development of the Malaysian furniture sector. MTC
writes “The recently announced 2017 Budget will play an
important role in charting business direction for both
SMEs and Bumiputra SMEs in Malaysia and the
workshop was aimed at enterprise accountant and finance
staff as well as company executives and business owners.”

Upcoming Delhiwood and EFE fairs
In related news MTC has posted an invitation for
Malaysian companies to participate in the 5th of
DelhiWood furniture and wood products fair to be held in
India1 – 4 March 2017.

DelhiWood is one of Asia’s largest fairs for furniture
manufacturers, wood-based handicraft manufacturers,
sawmillers, craftsmen, woodworking professionals,
builders, architects and interior designers in the region.

MTC says India’s imports from Malaysia are increasing.
In 2015, the value of major timber and timber products
exported to India amounted to RM1,890.5 million, an
increase of 6.3% compared with 2014. Exports include
logs, wooden furniture, sawnwood, particleboard and
plywood.

Another event, the Export Furniture Exhibition (EFE), will
run 8 to 11 March 2017 at the Kuala Lumpur Convention
Centre (KLCC).

The four-day event will host around 300 exhibitors
providing visitors with an extensive representation of the
range of products and designs produced in the country.
The fair will be organized by EFE Expo Sdn Bhd., a
wholly owned subsidiary company of the Malaysian
Furniture Council (MFC).

See: http://www.efe.my/the-show/event-highlights/seminarprofessional-
designers-program.html?id=254

5. INDONESIA

  EU must eliminate timber which is not verified legal –
DG of Forestry
Dr. Ida Bagus Putera Parthama, Director General of
Sustainable Management of Production Forests in the
Ministry of Environment and Forestry, has called on the
EU to strictly enforce the EU timber regulation. He said
the EU should firmly reject all illegally-sourced wood
products and continue to scrutinise non-legally verified
timber including wood products re-exported by third
countries.

Indonesia recently became the first country in the world
whose domestic timber legality system (SVLK) was
accepted as EU’s FLEGT licensing scheme.

Between 15-23 November some 845 consignments of
FLEGT licensed wood products were prepared for
shipment.

TTF extends congratulations
In related news, the UK Timber Trade Federation (TTF)
has said in its latest newsletter “We congratulate all
involved in Indonesia and the EU in seeing through the
first ever issuing of FLEGT licenses. Several members of
the TTF have taken delivery of goods from this first
FLEGT licensed shipment including James Latham,
Meyer Timber, Hanson Plywood and MDM Timber.”

David Hopkins, TTF Managing Director said “This marks
a historic achievement on behalf of the UK and Indonesian
governments, the UK timber trade and their combined
involvement in the development of this market-based
forest management policy.”

See: http://ttf.co.uk/article/ttf-members-receive-flegt-goods-
449.aspx

PEFC on promoting sustainable landscapes for
sustainable livelihoods
The PEFC (Programme for the Endorsement of Forest
Certification) recently concluded its annual PEFC Forest
Certification Week on the theme ‘Sustainable Landscapes
for Sustainable Livelihoods’. The purpose of which,
according to the PEFC, was to explore the role of forest
certification and sustainable supply chains in promoting
sustainable landscapes for sustainable livelihoods.

At the meeting it was announced that Thailand was now a
member bringing to 46 the number of governing bodies.

For more see: http://pefc.org/pefc-week-2016/home and
http://pefc.org/pefc-week-2016/general-info/pefc-week

6. MYANMAR

  Are confiscated and then auctioned logs considered
legal?
In response to the recent Swedish Court ruling against a
Swedish importer of teak from Myanmar, the Forest
Department (FD) announced in a press release that, with
immediate effect, wood products produced from auctioned
confiscated logs will no longer be approved for export.

The private sector in Myanmar reacted very strongly to
this move and asked for the deadline for the introduction
of this new regulation to be extended to allow current log
stocks to be cleared.

It understood that the FD has extended the deadline for
implementation of the ban to the end of April 2017 for
those mills which have purchased logs seized and then
sold on by government authorities.

China’s stance on timber imports welcomed
Myanmar has welcomed news from China that the
government is strongly promoting sustainable forest
management and certification of wood products from
domestic resources and from overseas. However, local
analysts question how much control can be exerted on
importers in Yunan Province where the border is ‘porous’
and import controls lax.

Efforts needed to reverse decline in furniture
manufacturing
At a recent meeting with Vice President U Myint Swe, U
Kyaw Kyaw Win, of the Myanmar Forest Products
Merchants Federation reported that, as a first step in
reversing the 25 year decline in the furniture
manufacturing sector in the country, ways need to be
found to ensure the sector has access to a sustained supply
of timber raw materials. He reported that currently there
are only three locally owned furniture plants in the
country, down from around 30 a decade ago.

Because prices for domestic logs are so high, driven up by
demand in international markets, many furniture makers
have to rely on informal and even illegal sources of raw
material. A reliable and fairly priced supply of timber and
tax incentives would go a long way to revive Myanmar’s
neglected furniture industry, he said.

Executives in Myanmar say conditions are ripe for
firms to expand
In a press release, German consulting firm Roland Berger,
reports on a survey of around two hundred senior
executives from companies of all sizes in Myanmar to
evaluate the consensus on opportunities and challenges
ahead.

The executives were enthusiastic about the outlook for
Myanmar saying they believe conditions are ripe for firms
to expand. Some 80% of respondents pointed to the
country's status as a frontier market with a large and
growing population as a prime reason for investing in
Myanmar.

But with a word of caution the consultants say “the road
won't be smooth. Like many emerging markets, Myanmar
also presents challenges to firms looking to grow. Firms
surveyed believe that labor issues and lack of legislative
certainty are the main risks to doing business in the
country. 41 percent of firms say that lack of skilled staff is
a very significant issue and for 85 percent it is the most
significant one.”

The domestic media in Myanamar said, when commenting
on the survey, “Companies in Myanmar expressed concern
about government regulation and policies, despite showing
optimism for future growth.”

For more see: https://www.rolandberger.com/en/press/Press-
Release-Details_15232.html

7. INDIA

  Sittwe deep water port ready to open
The Myanmar Sittwe deep water port at the mouth of
the Kaladan River on the Bay of Bengal is ready to be
commissioned. This port has been financed by India as a
part of the Kaladan Multi-modal Transit Transport Project
collaboration between India and Myanmar.

India’s interest in building this facility stems from the
need to open a cost effective route to ship goods to
Mizoram. When the port is fully operational an alternative
to the long and expensive transport route through the
narrow strip of Indian territory in West Bengal to Mizoram
will be available which should drastically reduce transport
costs.

No direct impact on formal real estate market from
demonetization says CREDAI
CREDAI has noted that the primary real estate market is
financed through mortgages from banks and financial
institutions, all of which are regulated. As such, cash
transactions for home purchases are not a major
component of this primary market.

On this basis, CREDAI has asserted that there will be no
direct impact on the primary real estate market arising out
of demonetisation. CREDAI further notes in a statement
that “in the aftermath of demonetisation, banks are going
to be flush with additional funds – and that a decline in
interest rates is possible”.

For the CREDAI statement see:
http://credai.org/press-releases/credai-stand-on-impact-ofdemonetization-
on-primary-real-estate-market

Double digit growth in domestic ply consumption
forecast
Industry analysts from Chart Advise have said large
plywood mills in India anticipate a major restructuring of
the plywood sector as the impact of the implementation of
the goods and services tax (GST) begins to affect the
operation of the so-called’ unorganised’ sector which
comprises hundreds of small and unregistered operators
producing low cost and often low quality panels.

The Indian plywood market is dominated by the
‘unorganised’ producers. Industry analysts estimate that
this unorganized sector could have between 60-75% of the
domestic market.

Plywood consumption is likely to grow in line with
demand for homes and on the back of construction
activity. In 2015 sales by the major manufacturers
expanded marginally but for 2017 analysts expect double
digit growth especially in the Northern and Western
regions of the country.

For more see: Can Plywood Stocks be next Multi-bagger?? |
Interesting Insights

Dang auctions net good profits
The October and November auction programme in the
Dang Division in Western India has ended and the
Forestry Department and other participating teak and
hardwood producers have reported good profits.

At the beginning of the auction season everyone was
expecting prices to slide due to the ‘cash crunch’ but
buying activity was firm, especially as large sized logs
were offered. Large domestic teak logs are preferred to the
small diameter imported plantation teak logs.

The logs offered in October and November were from
Forestry Department areas, private forests and from Forest
Worker’s Co-Operative Societies. With such a mixed
group of suppliers prices are usually, at best, moderate but
this year was different. It has been reported that over
10,000 cu.m of logs were sold and the prices secured are
shown below.

Good quality non-teak hardwood logs 3-4m long having
girths 91cms & up of haldu (Adina cordifolia), laurel
(Terminalia tomentosa), kalam (Mitragyna parviflora) and
Pterocarpus marsupium attracted prices in the range of
Rs.800-900 and medium quality logs were sold at between
Rs.600-800 while average quality logs fetched Rs.300-500
per cu.ft.

Black stripe teak attracts furniture makers
Reports indicate that flow of fresh logs to the auction
depots of Narsingpur, Baitul, Harda, Chhindwada,
Narmada, Timarni and Khirakiya has been good and that
the logs are prime quality.

The next auction programme for these areas should be
announced soon. Teak logs from these central areas are
mostly black striped and favored for furniture so buyers
are awaiting the beginning of the auctions. Teak from
these areas is transported as far as Gujarat, Maharashtra,
Rajasthan and Delhi.

No need for Dalbergia restrictions in India say
manufacturers
Now that all Dalbergia species are in CITES Appendix II
Indian exports of musical instruments and parts as well as
handicrafts and house decoration items must exercise
caution as many of these items are produced from
domestic D.latifolia and D.sissoo.

It is claimed that India has sufficient domestic stock of
both these species and their sales are exclusively handled
by the various Forest Departments through public
auctions. Manufacturers and exporters has expressed
concern at the world wide listing of all Dalbergia species
saying there is no need for such restrictions in India.

Good sized plantation logs continue to arrive
Demand for plantation teak logs and sawnwood remains
firm. Suppliers have been delivering good sized logs.

As was the case in November, prices from the new
plantation teak log suppliers remain unchanged at:Taiwan
P.o.C (US$,1036 to 2,126 per cu.m C and F) and
Honduras (US$471 to US$539 per cu.m C and F). Sawn
teak from China (US$855 to 1,118 per cu.m C and F) and
from Myanmar (US$461-2,895 per cu.m C and F).

Myanmar teak flitches resawn in India
Supplies of sawn teak from Myanmar and China are
keeping prices stable.

Prices for imported sawnwood
No recent price changes have been reported.

Prices for WBP Marine grade plywood from domestic
mills
Prices remain unchanged. Plywood exporters especially
those in Malaysia are organizing sales promotion missions
in India as demand in Japan for tropical plywood is falling.

8. BRAZIL

  Furniture market performance
Domestic retail sales of furniture have suffered this year
due to the economic and political problems in the country.
Between January and September this year there was a
decline in retail sales of around 10%. At the same time, in
the first three quarters of 2016, furniture production also
dropped almost 13%.

Weak domestic demand weighed heavily on employment
in the furniture industry with a 4% drop in the numbers
employed being observed.

However, according to the Furniture Industry Association
of Rio Grande do Sul State (MOVERGS) domestic
demand for furniture should pick up gradually in 2017
gaining momentum in the second half of the year.

Wood industries evaluate prospects for 2017
2017 should be the year of stabilisation for the wood
mouldings sector in Brazil according to ABIMCI
(Brazilian Association of Mechanically-Processed Timber
Industry). This was the conclusion of a survey of members
which account for around 90% of national moulding
production. However, much will depend on the supportive
measures from the new government in Brazil and on the
direction of the US economy.

The projection of a stable year for businesses is based
largely on the assumption that the US economy will
expand under the new Republican administration. But
producers remain alert to the risks from rising production
costs, especially those related to social issues, energy and
raw material supplies.

Decline in export revenues
Exports planation wood products increased in the first 10
months of this year. Between January and October 2016,
pulp exports increased 11% year on year to 10.7 million
tonnes. Paper exports reached 1.7 million tonnes in the
same period, a 3.2% growth compared to 2015. In addition
there was an over 60% rise in exports volumes of
woodbased panels 831,000 cu.m.

In the first 10 months of this year the plantation wood
sector recorded export earnings of US$ 6.3 billion (-2.5%
year on year), pulp reached 4.6 billion (-1.7% y.o.y ),
paper US$ 1.6 billion (-7.3% y.o.y) and woodbased panels
US$ 201 million (+ 26.4% y.o.y).

China remains the main destination for Brazilian pulp,
with a 38% share followed by Europe (34%). Latin
American countries continue to be the main destinations
for paper and woodbased panel exports accounting for
almost 60% of total plantation wood based panel exports.

According to the IBÁ (Indústria Brasileira de Árvores
/Brazilian Tree Industry) 2016 Report, For the year to
August 2016, 4.193 million cu.m of woodbased panels
were traded against 4.387 million cu.m in the same period
in 2015, despite the fall export values increased.

According to IBÁ, domestic demand will remain subdued
in early 2017 as GDP forecasts are not encouraging and
inflation is likely to remain high. Against this background,
the Brazilian woodbased panel industry aims to focus on
exports while monitoring domestic construction and
furniture production.

9. PERU

  Stimulating innovation and entrepreneurship
The timber industry is constantly seeking new ideas and
technologies and this year CiteMaderas and CitePucallpa
provided businesses with an opportunity for technological
internships and visits to fairs within Peru and overseas.
For example, entrepreneurs visited the M & M Fair in
Bogotá, considered the most important trade fair in the
sector in Central America. Participants had the opportunity
to observe the technology applied in the Colombian
furniture industry as well as to build contacts in the
country.

Another business group visited Interzum Guangzhou,
China. The group comprised representatives from twelve
businesses located in Lima, Arequipa, Cusco and Trujillo.

A further 19 Peruvian furniture sector entrepreneurs
visited manufacturers in Southern Brazil. Also, a large
group of businessmen went to Shanghai Furniture Fair in
September this year and benefitted from discussions with
domestic factory owners on technology and designs.

Most of these events were organised by Peruvian forestry
consultants which work together with public and private
institutions that have programmes for development and
innovation of the forestry and wood processing sectors
such as the Committee of Wood Exporters within ADEX,
the Commission for the Promotion of Exports (Promperú),
the Association of Loggers and Allied Workers of Loreto
(AIMAL), the Association of Forestry Producers of
Ucayali (APROFU) and the National Society of Industries
(SIN).

SERFOR - workshop to validate guidelines on
investment in forest plantations
The Forest and Wildlife Service (SERFOR) prepared
‘Methodological Guidelines for the Identification,
Formulation and Social Evaluation of Public Investment
Projects (PIP) in Forest Plantations’ and at a workshop,
invited comments from the public and private sector.

The workshop was inaugurated by Ing. Juan Carlos
Guzmán Carlín, Director General of the General
Directorate of Policies and Competitiveness of SERFOR
who highlighted the work being done at the inter-sectoral
level to promote forest plantations.

Participants were informed of the technical, legal,
economic, social, environmental and cultural aspects that
have been considered in the elaboration of the PIP.

Throughout the workshop, it was made clear that forest
plantations would only be promoted on degraded or
deforested land. Another point emphasised was the need to
first consider the target market for the plantation output.

Entrepreneurs trained in methods to eliminate illegal
timber from the supply chain
A workshop on ‘Renewing confidence in the legal timber
trade: What tools are available for Peru?’ was recently
concluded in the regions of Loreto, Ucayali and Lima.
The aim was to strengthen the capacity of producers in
legality verification systems and participants had the
opportunity to make simulated use of various methods to
gain a better understanding of the challenges such systems
present.

This training event was possible thanks to the support of
the ProMadera project (financed by the Dutch Sustainable
Trade Initiative-HDI) under the ProAmbiente programme.

Proposals to improve management in the forestry
sector
Representatives of SERFOR recently met with members
of the National Forest Confederation of Peru, timber
producers and exporters' guild to discuss proposals to
improve management and competitiveness in the sector.

Present at the meeting were representatives of regional
Amazonian governments, the office of Congressman of
the Republic, the Ministry of the Environment and the
Forest and Wildlife Resources Monitoring Agency
(Osinfor).

Speaking at the meeting SERFOR Executive Director John
Leigh Vetter praised this initiative saying such meetings
strengthen coordination between public institutions and
civil society because they improve the dialogue in seeking
alternatives that can ensure the sustainable use of the
country’s forests.

During the meeting Leigh Vetter called for forest
resources to be included in the national account to give
greater value to the standing forest as this will draw
attention to the opportunities for sustainable utilisation,
job creation and generation of export earnings. He called
for work to begin on valuing the forest and for its
inclusion in national accounts.