¦ The EU accounts for 12% of Malaysia’s timber output.
¦ The Malaysian timber industry is aiming for timber exports of RM53m in 2020.
¦ Value added production is increasing rapidly.
¦ The Global WoodMart exhibition in Kuala Lumpur will be a biennial event.
¦ Malaysia is the first Asian country to achieve PEFC environmental forestry certification.

Malaysia timber and wood products exports to the EU accounted for approximately 12% of total production in 2010. The country’s total exports for the year were worth RM20.5bn (approximately £4.45bn), a recovery following three years’ decline. Exports for 2011 are expected to hold up at RM21bn.

Whilst demand patterns in the US and Europe continue to be relatively unstable, some slow improvement was noted in the first quarter of 2011, propped mainly by the renovation and refurbishment sectors, reported to have improved compared to demand seen in 2009 and 2010. Conversely, Asian markets have continued to grow, with major demand increases seen in China, India and others prior to the earthquake/tsunami disaster in Japan. Whilst economic growth within the EU averaged under 2% in 2010, most Asian economies averaged 5%.

The Asian Development Bank acknowledged that “Developing Asia was the first region to emerge from the downturn, helped by decisive, large-scale fiscal and monetary policy measures. Domestic demand has been resilient, especially in the region’s larger economies, and the economic cycle suggests that economies have bottomed and begun to recover. A number even posted double-digit gross domestic product growth in the first half of 2010.

For Malaysia and its timber industry, nestled between the two Asian giants China and India, the prospects of timber exports increasing in 2011 compared to 2010 is quite likely, although not by a significant volume owing to constraints in supply, regulated by adherence to sustainable forest management practices. The Malaysian industry, similar to other timber industries worldwide, also faces the challenges of increasing energy and labour costs, not to mention fluctuating fuel and freight prices.

Adding value

The industry has now accepted that its guiding principle for the future has to be adding value to timber resources through optimal use, minimal waste and product innovation to compete with other materials which are not subjected to the stringent controls and scrutiny that timber is exposed to. Tropical forests, more than any other type of forest, have their own endemic complexities and need to be economically, socially and environmentally viable given the competing pressures on land use in developing countries.

Malaysia’s National Timber Industry Policy aims to achieve a target export value of RM53bn by the year 2020. Resources from natural forests will be supplemented by imported and local plantation resources. In 2009, Malaysia imported over 28 million m³ of timber.

Value-adding has been increasing over the years and is being strongly encouraged within the Malaysian timber industry, pioneered by operators in Peninsular Malaysia and growing in Sabah and Sarawak.

Although plywood and sawn timber still account for a sizeable percentage of exports, volumes have been steadily declining. Producers have long been producing high quality flooring, mouldings, doors and wooden furniture, to name a few further processed products and their exports have steadily risen.

Amongst the projects that the Malaysian Timber Council (MTC) has led recently is Lamtec, promoting production of laminated scantlings for joinery. Consequently Malaysia is already well-known for quality 3-ply products. Interest in this project spurred the next phase in the laminated scantlings sector known as Lamselect, to be launched soon.

Some players in the timber industry have also shown keen interest in glulam manufacture. Technology research and feasibility studies will steer future progress.

Product innovation is at the forefront of the Malaysian industry, with the objective of making its products competitive internationally. This was clearly reflected at the MTC’s inaugural and highly successful Malaysian Global Woodmart exhibition (MGW) in Kuala Lumpur last October. The Innovative Products Section featured engineered components made of wood biomass and modified timber as well as thermally modified wood products, all in line with maximising the use of wood resources efficiently. The next MGW will take place in Kuala Lumpur October 4-6, 2012 (

Another challenge over the next decade for the Malaysian timber industry is to encourage domestic confidence in using wood, in addition to servicing export markets.

Certification progress

Malaysia has continued to make headway in forestry and timber environmental certification. It is the first Asian country to be endorsed by the Programme for the Endorsement of Forest Certification Schemes (PEFC), with over 4 million ha of forest certified, producing over 50 commercially available species to suit various applications. Increasingly, timber industries around the world are committing to trading only in legal and/or sustainably produced timber, reciprocated by consumers who in turn will only consume wood if they’re confident it is legal and sustainable. This bodes well for countries like Malaysia which have actively pursued forest certification.

So, how is the impending EU Illegal Timber Regulation (ITR) likely to impact on Malaysia? It places pressure on its timber industry to ensure that all timber sources are inventoried and accounted for, and most importantly, are from legal, if not sustainable sources.

And what of emerging markets like China and India, which are purchasing significant volumes from various sources, including Africa and the US? Won’t Malaysia be tempted to sell to these giants, rather than prove her environmental credentials to environmentally sensitive markets such as the EU?

The answer is that Malaysia has well established relationships with Europe spanning over half a century and has a strong reputation for reliability and quality materials.

This is something the Malaysian industry wishes to retain, hence the financial and human resources being invested in addressing policy changes both in Europe and on the ground in Malaysia.