2. GHANA

  First half export round-up
Ghana earned euro 82.9 million from the export of
152,652 cu.m of wood products in the first half of 2017.
This represented an 25% decline in export earnings and a
21% decline in export volumes compared to the first half
of 2016.

June exports totalled 35,700 cu.m, down almost 6% year
on year. June primary product exports, comprising poles
and billets, earned euro 3,779,262 from 12,462 cu.m,
representing 8% of total wood product export volumes in
the first half of the year.

June exports of secondary wood products comprising
sawnwood, plywood, boules, veneer and kindling formed
the bulk of wood product exports and earned euro
76,301,287 from a volume of 134,140 cu.m.

In Ghana, tertiary wood products are defined as processed
mouldings, flooring, dowels and furniture parts and June
export earnings totaled euro 2,814,038.

 State finances get a boost as oil production ramped up
A report from the Bank of Ghana shows that oil revenues
more than doubled between the second half of 2016 and
the first half of this year as production was increased.
Output levels have risen steadily since the start of a new
well in August 2016.

The rises in output and revenue have allowed the
government to expand contributions to the Petroleum
Holding Fund, the Ghana Stabilisation Fund and the
Ghana Heritage Fund which serves as a savings pool for
future generations.

For more see: http://www.oxfordbusinessgroup.com/economicnews-
updates?country=54035

Private sector confidence at new high
The Association of Ghana Industries (AGI) newsletter for
the second quarter of this year points to rising business
confidence. The AGI business barometer for the second
quarter of 2017 jumped to the highest since 2012
reflecting a significant change in confidence.

Behind the rise was the easing of the tax burden on
businesses which lowered the cost of doing business. Also
the drop in interest rates help push the index higher.

Expectations of Government’s One-District-One-Factory
initiative aided by US$1.5 billion Chinese financing also
boosted expectations in the private sector.

For more see:
http://agighana.org/uploaded_files/document/1ecb3d37056e8d2b
38c57cac38086646.pdf

3. SOUTH AFRICA 

  Business will remain quiet until housing market
recovers
Consumer confidence is at an all-time low in South Africa
as near zero economic growth, high unemployment and
political uncertainty weighs on sentiment. Against this
backdrop it is not surprising that the housing market is
severely depressed.

Recently released data shows the extent of the problem;
year on year, approved plans for homes over 80 sq.m are
down 27%. There has been a sharp drop (26%) in
approvals for apartments and an over 50% decline in
approvals for other residential buildings.

On top of this, approvals for non-residential buildings as
well as for renovations are both down from a year earlier.
The collapse of the housing market is impacting the timber
and hardware sectors.

Meranti windows face tough competition in lowmedium
income home segment
It is no surprise that domestic pine mills are seeing stock
levels rise beyond anything they have experienced and
sales prices are coming under pressure. The woodbased
panel market is suffering the same as the sawnwood
market and there has been a fair amount of discounting as
producers try and rebalance stocks.

In contrast, demand for American hardwoods has been
surprisingly steady with good demand for white oak and
ash. There has also been some demand for walnut. Also,
traders report good business in European timbers
especially spruce and larch including engineered beams.

Of concern is the falling demand for meranti due to the
drop in housing activity. Meranti windows are mainly for
the high end of the housing market where construction has
slowed. While the slowdown in building has affected the
lower end of the market to a lesser degree, demand in this
segment is for aluminum windows not meranti.

The perennial problem of supply continuity for African
timbers continues. Until this can be addressed South
African importers remain reluctant to commit if they
cannot be assured of a consistent supply.

Timber products to reduce the environmental impact
of buildings
“South Africa was the first African country to develop a
‘green’ building rating system and today has a number of
rated green building projects” according to authors of a
new life-cycle study.

A recent investigation reported in the South African
Journal of Science compares the environmental impact of
different roof truss systems in South Africa. More than
70% of all sawnwood in South Africa is used in buildings,
especially in roof structures where light steel is a
competitor.

Using a simplified life-cycle assessment approach a team
compared several roof truss systems used in low to
medium-income homes in South Africa. The results show
that the two timber systems had overall the lowest
environmental impact.

See: http://www.sajs.co.za/potential-south-african-timberproducts-
reduce-environmental-impact-buildings/philip-lcrafford-
melanie-blumentritt-c-brand-wessels

4. MALAYSIA

 Restrictions on foreign workers lifted
The Malaysian media has reported that Deputy Home
Minister, Nur Jazlan Mohamed, has said a decision has
been taken on allowing export oriented manufacturers to
employ more foreign workers. However, the press
coverage is contradictory with some saying the
government policy on restricting foreign workers has been
lifted while others say a change in the regulation is being
considered.

The rational for change is based on a World Bank report
which it is claimed says a 10% net increase in low-skilled
foreign workers would raise real gross domestic product
by 1.1% as the wages for these workers keep overall
wages down which, in turn, lowers prices and production
costs and boosts exports.

For more see:
https://www.themalaysianinsight.com/s/18051/

In related news the World Bank has revised up Malaysia's
gross domestic product growth forecast for this year to
5.2% from the 4.9% in June.

Faris Hadad-Zervosof the World Bank said the Bank
expected growth in Malaysia to trend higher as long as the
economy remains open and as long as global economic
growth continues.

Clean Air Regulations to impact new companies
Malaysia’s Environmental Quality (Clean Air)
Regulations 2014 or CAR 2014 sets out to control
emissions of air pollutants from various industrial
operations and timber industries are included in CAR 2014
depending on the operations and processes it adopts as
well as the type and amount of pollutants it produces.

Existing factories were given a five-year grace period
(until June 2019)to comply but new enterprises and new
installations in existing factories must comply with CAR
2014 immediately.

Analysts report the timber industry will face many
challenges in complying with this regulation. To help
address this the Malaysian Timber Council has organised a
seminar to enable stakeholders to better understand CAR
2014 and sharing industry best practices.

Idea for a pulp mill in Sarawak raised once again
After leading a Sarawak delegation to visit a factory at
Kunda in Estonia, Deputy Chief Minister, Awang Tengah
Ali Hasan, said Sarawak has the potential to develop a
mechanical pulp mill to utilise forest plantations.

The idea for a pulp mill in Sarawak has been raised over
the past several years but this latest visit to a chemithermomechanical
pulpmill has rekindled interest in
Sarawak.

Aim to end illegal logging by 2020
The Sarawak Forest Department hopes to eliminate illegal
logging by 2020, said its Deputy Director, Jack Liam.
However, he said this was a challenging task due to the
state’s vastness and the fact that the perpetrators were
getting very smart in avoid detection.

The Forest Department was collaborating with other
government agencies especially the Marine Police,
General Operations Force (GOF), Sarawak Forestry
Corporation (SFC) as well as the Malaysian Maritime
Enforcement Agency (MMEA) to achieve its target.

Until the end of September, 9,093 cubic metres of logs
with an estimated royalty value of RM591,370 had been
seized along with assets including a ship, trucks,
excavators and tractors.

Sabah exports
The Sabah Department of Statistics released data which
showed export of timber products dropped by 3.7% in first
half of 2017 as compared to the same period last year.
This year the value first half exports was RM785,474,320
compared to RM815,920,456 last year.

5. INDONESIA

  SVLK implementation needs to take account of
realities faced by small craftsmen
Furniture makers in Jepara, Central Java recently met to
discuss the constraints faced by small and medium
enterprises in implementing the SVLK timber legality
verification system.

The meeting was was facilitated by the Center for
International Forestry Research (CIFOR) and the Head of
the Sub Directorate of Wood Legality Verification
Information in the Ministry of Environment and Forestry,
Mariana Lubis, was present.

The chairman of the Jepara Wood Crafts Association,
Margono, pointed out the many problems faced by
furniture craftsmen. The main problems identified were
access to investment capital, the availability and cost of
raw materials, inadequate human resources, the lack of
marketing know-how and SVLK enforcement. Margono
said most of these problems have been around for a long
time but compliance with the SVLK is a new and
troublesome issue.

He said the application of SVLK for furniture craftsmen is
complex. First, most SMEs do not have the management
capacity to handle the new requirements. Secondly,
compliance is a major expense for SMEs. Another
problem is that enterprises see no direct benefit in
becoming V-legal.

In response, Mariana Lubis said SVLK compliance is the
only path to access to the EU markets but she
acknowledged SMEs face serious problems with
implementation of the SVLK and that implementation
needs to take account of the real conditions faced by small
craftsmen.

In related news President Joko Widodo has called on the
various ministries and agencies to modernise the
handicraft industry from upstream to downstream so that
the sector can expand.

He said efforts need to be made to address raw material
supply, manufacturing technology as well as finishing and
packaging to marketing.

Talks started on rattan export regulations
The government and the private sector are discussing the
recent changes to the rattan export restrictions and will
begin by analysing supply and demand. Recent changes in
the rules on rattan exports allows the export of semiprocessed
rattan.

The ministry is discussing the issue with the private sector
in the Indonesian Rattan Businessmen Association (Apri)
and the Indonesian Furniture and Craft Association
(Himki).

To advance the discussion Apri is calculating the supply
and Himki the demand. According to Enggartiasto Lukita
of the Ministry of Trade, the final data will be compiled by
PT Perusahaan Perdagangan Indonesia (PPI), the only
Indonesian state-owned trading house. If a surplus is found
then PPI alone can export rattan in semi-processed form.
Others wishing to export must fully process the rattan into
final products.

In related news, the Director of Forest and Plantation
Products Industry in the Ministry of Industry, Edy Sutopo,
has said manufacturers of rattan products need to pay more
attention to creating designs which have appeal in
international markets. He said his impression is that
manufacturers launch new designs without first
researching what designs are in demand.

He said designers tend to speculate rather investigate with
buyers what is suitable for a particular market.

Indonesia's competitiveness rises
This year Indonesia's global competitiveness according to
the World Economic Forum Global Competitiveness
Index 2017-2018 improved to 36th position out of 137
countries. This was up five ranks compared to the previous
assessment.

Airlangga Hartarto, the Minister of Industry said
Indonesia’s improving global competitiveness is good for
investment flows but more must be done in terms of
strengthening innovation in the industrial sector.

Social forestry should improve livelihoods
The Minister of Environment and Forestry, Siti Nurbaya,
has encouraged managers of social forestry programmes to
strengthen the family economies of the people involved
through the creation of new business opportunities at the
grass roots level. She said social forestry is not just about
access to the forests but also about improving incomes.

Jakarta exhibition showcases latest technologies
The International Furniture Components Exhibition
(IFMAC) and Woodworking Machinery Exhibition
(WOODMAC) themed “Global Technologies to Boost
Indonesia's Furniture Industry” was held recently in
Jakarta.

Speaking during the event, Abdul Sobur, Vice Chairman
of HIMKI said to improve the competitiveness of
Indonesian furniture industry companies must embrace the
latest production technologies appropriate to their needs to
accelerate efficiency. He applauded the arrangement of the
IFMAC/WOODMAC event as this supports the domestic
industry to advance productivity and competitiveness.

Indonesia's wood furniture and handicraft industry
currently supports a direct work force of around 500,000
as well an estimated 2 million indirect workers in
subcontractors and service providers.
 

6. MYANMAR

  Is high value sawn teak for international markets an
‘added value’ product? – the debate continues
As of September total foreign investment in energy,
agriculture, livestock and fishery, manufacturing, transport
and communication, hotel and tourism, real estate,
industrial development and other services sectors has
reached just over US$4 billion (5.4 trillion kyat).

The oil and gas sector has seen the biggest foreign
investments while the construction sector the lowest.

However, Myanmar Forest Products Merchants Federation
(MFPMF) Deputy Chairman, U Thein Win, questioned the
value to the economy of foreign investment in the timber
sector since most companies concentrate on non-finished
products but consume huge quantities of raw material.

In response, analysts challenge this negative opinion and
point out that Myanmar’s main timber export, sawn teak,
is a high value product with high international demand and
as such is a value-added product.

The price of top quality and large section sawn teak in
international markets is very high and earnings for the
country from teak sawnwood exports, cubic metre for
cubic metre, are higher than from exports of teak furniture.

On the other hand, the reverse is true for non-teak timber
where furniture manufacturing is a better option.
However, to take advantage of the opportunities for
furniture production from non-teak hardwoods efforts
need to be directed to improving supportive infrastructure
and ensuring the availability of supplies of non-teak logs
at stable prices to raise the competiveness of domestic
products.

One executive from a furniture manufacturer said the
industry would expand faster if the Forestry Department
was more flexible in application of regulations and noted
that illegal felling and smuggling remains a major
challenge for the Forestry Department.

Earnings from timber just a fraction of total exports
Between April and September this year Myanmar
exported US$6.469 billion of which agricultural products
accounted for most at US$1.435 billion. Timber exports
were just US$107 million.

Myanmar’s trade deficit for the first six months of the
2017-18 fiscal year has widened to US$2.2 billion
compared to US$1.8 billion during the same period in the
previous financial year according to the Ministry of
Commerce.

MTE to open sanctuary for retired working elephants
According to Dr Zaw Min Oo of the Myanma Timber
Enterprise (MTE) an Elephant hospital/sanctuary for
retired, sick and injured elephants will be established in a
forest area of about 2,500 hectares close to Oaktwin
Township, Taungoo District.

A retired MTE General Manager said that it is very
expensive for MTE to care for aging and sick elephants
adding that there are many who criticised MTE for the
slow progress of reform but that few have offered
to assist MTE in such a task.

The new project is being supported by the US based Asian
Elephant Support (AES) a non-profit foundation dedicated
to the care and conservation of Asian elephants in their
range countries and the people whose lives are intertwined
with this magnificent animal.

Minimum wage hike discussed
The National Minimum Wage Committee has tentatively
suggested Myanmar’s new minimum wage should be reset
to somewhere between 4,000 and 4,800 kyats (US$2.93 to
$3.53) for an eight-hour working day. The current rate is
3600 Kyats.

After consultations with representatives of workers and
employers the new rate will be proposed to parliament for
approval.

 

7. INDIA

  Indian real estate in 2017 and beyond – new report
from CREDAI
CREDAI, in association with its partner CBRE, has
released a report “Indian Real Estate in 2017 and
Beyond”. The report covers the major policy related
disruptions resulting from government policy changes
which have challenged the traditional way the real estate
sector operates.

According to the report new regulations will increase the
share of the ‘organised’ segment of the real estate sector
which will help improve the ease of doing business in the
country.

The report anticipates major changes in regulation,
finance, the customer base and technology which should
have positive impact and create a new operating
environment in the sector.

The report also provides insights into changing customer
preferences in office, retail, residential and warehousing
space. For instance, the traditional thinking on office
spaces are being disrupted by a younger generation of
workers. Many young office workers in India feel the
quality of ‘office design’ impacts their productivity to a
large extent.

The press release from CREDAI says “The real estate
sector in India is one of the key contributors and mainstays
for India’s development as a nation. Real estate in India
continues to be in a dynamic phase and the pace at which
the four cornerstones – Regulation, Finance, Customers
and Technology are evolving, a more than incremental
transformation in the sector is expected in the coming
years.

In this report we have dwelled on how a strong foundation
for this change has already been laid with a conducive
operating environment, the future growth of the sector will
be determined by many other factors”.

See: https://credai.org/press-releases/credai---cbre-released-ajoint-
report-indian-real-estate-in-2017-and-beyondat-thecredai17thnatcon-
2017-london

In related news, Jim Yong Kim, the World Bank President
has said the Indian economy is experiencing temporary
disruptions as the new Goods and Service Tax (GST) is
rolled out but will get back on track soon.

In the first quarter there was a sharp deceleration in
growth but as companies adjust the overall impact of the
changes in tax will have a positive effect on the economy.

Teak auction in Western India
Auctions at various forest depots in the North and South
Dangs Divisions have been concluded. Approximately
9,000 cubic metres of mainly teak logs were on offer.
Other hardwoods sold included mainly Adina cordifolia,
Gmelina arborea, Pterocarpus marsupium, Acacia catechu
and Mitragyna parviflora.

Since imported teak logs are mostly of small girth, buyers
attending the domestic auctions are interested in
purchasing larger sized logs.

Another advantage from buying domestic teak is that the
logs are sold with the bark and much of the sapwood
removed whereas for imported plantation teak logs the sap
is intact.

Top 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.800-1000per cu.ft. Medium quality hardwood logs
were sold at between Rs.600-700 and low grade logs sold
for Rs.300-400 per cu.ft.

Imported plantation teak
Demand for imported logs remains steady despite some
weakness in the rupee exchange rate against the US dollar.
Against this background C&F prices are unlikely to
change in the short-term.

Pressure for revision of the GST on wood and wood
products continues. The next meeting of GST Council is
set for 24 of October when it is anticipated the issue will
be considered.

Current prices for imported plantation teak continue to be
in the range previously reported.

Locally sawn hardwood prices
Exmill prices for hardwoods are unchanged but are subject
to an 18% GST.

Myanmar teak prices
There were no changes in prices over the past two weeks.
Wholesalers report that business is slow as buyers
consider the prices are high.

Prices for imported sawnwood
Prices for imported sawnwood (KD 12%) remain
unchanged.

Pressure for plywood price increase eases as local
taxes eliminated
Plywood manufacturers complain that rising transportation
costs and rising costs for raw materials such as logs,
veneers, and resins means that they need to raise prices by
around 5% to maintain profitability.

However, manufacturers have benefitted from the
elimination of some state taxes as well as many of the
octroy taxes (a local tax collected on products brought into
a district for consumption) such that the pressure for an
increase in price has eased.

Plywood prices continue as previously reported.

8. BRAZIL

  Hint of a recovery in domestic construction sector
Expectation of an economic recovery in 2018 with GDP
forecast at 2% is good news for the Brazilian construction
sector and the timber industry. Prospects have also
brightened as investment in housing is set to expand as the
Federal Government will launch a programme which aims
at delivering 6 million new homes.

According to the Technical Division of the Civil
Construction Industry Union in Paraná State
(SINDUSCON-PR) while prospects are looking good for
it to become a reality for the industry it will be necessary
for the country to promote structural reforms.

Among the risk factors behind a resumption of civil
construction looms the issue of long-term financing and
the housing policy of the government.

But, as pointed out by SINDUSCON, one of the major
challenges to be overcome in the construction sector is the
hesitance of consumers when it comes to wooden frame
homes. This must be addressed through active promotion.

The Brazilian Association of Mechanically-Processed
Timber Industry (ABIMCI) has pointed out that
acceptance of a construction system using wooden frames
will generate demand for wood products and through this
the industry can contribute more to addressing the housing
shortage. But, for this to happen the wooden frame system
needs to be recognized so home financing opportunities
are available.

Production and export of forest products in early 2017
Production and exports by the planted forest sector in the
first eight months of 2017 were positive. Compared to the
same period of last year pulp exports grew 4.9%, wood
panel exports were up 30% and paper pulp exports
expanded almost 1%.

For the woodbased panel industry the good news was that
domestic demand picked up, rising 1% year on year.

Between January to August 2017 revenues from all
exports totalled US$5.5 billion (+ 9.6%) of which US$191
million was derived from the export of wood panels.
Woodbased panel exports amounted to 840,000 cu.m,
between January and August of this year. During the same
period, domestic sales of wood panels amounted to 4.2
million cu.m.

Wood panel and laminate flooring output
In 2016, Brazilian production of reconstituted woodbased
panels dropped 2.4% compared to 2015, ending the year at
7.3 million cu.m. Production of MDF/HDF and HB fell
8.8% and 8.9%, respectively while production of MD
particleboard increased 9%.

Part of the decline in sales of MDF/HDF and HB panels
was the result of reduced household spending on mainly
furniture, a major segment of woodbased panel market in
Brazil.

In 2016 sales in the furniture sector fell 12% leading to a
decline in sales of reconstituted wood panels in the
domestic market. In order to compensate for sales
reduction in the domestic market, the industry directed
production to international markets and exports topped 1.1
million cu.m 64% higher than in 2015.

Meanwhile, laminate flooring production totalled 11.8
million sq.m in 2016 which represented a 7% reduction
compared to 2015.

9. PERU

  Two million hectares of concessions to be reallocated
According to the National Forestry and Wildlife Authority
(Serfor), of the 7.5 million hectares of timber forest
concessions allocated in Peru, only around 4.3 million
hectares are operational.

Some 3.2 million hectares of concessions have been
returned to the State. Of those that were returned at least 2
million hectares in Loreto and Ucayali could be
reallocated before the end of this year according to Serfor.

Serfor executive Director John Leigh Vetter has indicated
that concessions in Ucayali would be ready for
reallocation by the end of October while those in Loreto
are in the process of review.

In the case of Madre de Dios, where concessions have also
been returned to the State, reallocation will follow the new
abbreviated granting procedure through which a Regional
Government Commission will prequalify bidders based on
their technical and financial capacity following the Serfor
guidelines.

Law on promoting forest plantations ready for
Congress
Serfor has announced that the law on the Promotion of
Forest Plantations, a legislative initiative promoted by the
Ministry of Agriculture (Minagri), is to be presented to
Congress in the second half of October.

This law aims to boost private investment in establishment
of forest plantations for the production of wood and nonwood
products. The law provides for economic and
financial incentives as well as tax incentives and the
easing of import duties on machinery and equipment. This
new initiative is totally different from the Forestry and
Wildlife Law that regulates this activity.

Traceability as a tool to raise competitiveness and
improve image of timber industry
A recent workshop on ‘Traceability as a Tool for
Management and Responsible Timber Trade’, organised
by Serfor attracted experts and entrepreneurs from six
countries.

The aim of the workshop was to share experiences on the
traceability process which consists of tracking timber from
its origin, through transport and processing for export in
order to improve the management of the forest industry
and raise competitiveness and access in international
markets.

The Serfor Executive Director said this initiative seeks to
contribute to a common vision between the State and the
private sector. The aim is to develop transparent
mechanisms to guarantee the legal origin of timber and its
products, to improving the competitiveness of companies,
enhance the image of the country in international markets
and improve the welfare of the people of Peru.

Experts from governmental institutions, international
organisations and private companies from the United
States, Chile, Guatemala, Mexico, Colombia and Bolivia
discussed the forest regulations, the traceability of timber
from natural and plantation forests and the importance of
domestic processing and trade.

 
The seminar was supported by international institutions
such as the World Resources Institute, German GIZ
Cooperation and national institutions such as the
Association of Exporters (ADEX), WWF and local
businesses.