Malaysia timber exports expected to stay at RM21b

KUALA LUMPUR: Malaysia's timber exports are likely to hold up at RM21 billion as global demand in different regions conti-nues to be volatile and somewhat unpredictable.


"While timber demand from Europe has dropped as they struggle with sovereign debt crisis, we're expecting exports to Japan to hold up in the second half of the year," said Plantation Industries and Commodities Minister Tan Sri Bernard Dompok.

Last year, timber exports recovered to RM20.5 billion after three straight years of decline.

Asked if timber exports are likely to fall this year, he replied, "Since the second quarter of the year, we have seen underlying fundamentals of demand and supply favouring price rise in the commodity."

This is because as Japan seeks to reconstruct buildings and infrastructure destroyed by the triple disaster of an earthquake, tsunami and prolonged nuclear crisis four months ago, it will need substantial amount of tropical hardwood from Malaysia.

Every year, Japan, imports 60 per cent of its tropical hardwood plywood requirements from Malaysia.

Through its joint-venture companies in Sarawak, Japan imports a million cubic metres of panel products from the state.

The Malaysian Timber Industry Board confirmed that last year Malaysia shipped RM3.7 billion worth of timber to Japan.

The minister was speaking to reporters after officiating at the opening of the 2011 Malaysian Forestry Dialogue held here yesterday.

Other inflationary pressures on timber prices are brought on by costlier fuel and wages.

Since the start of the year, timber companies had to contend with costlier production costs as world oil price had been trading at more than US$100 (RM301) per barrel.

As the country seeks to reduce reliance on foreign labour, many timber companies had to raise wages to fulfil contract orders. These factors, to a certain extent, contribute to cost escalation in timber evacuation and transport.