A full recovery in the Malaysian timber industry depends on an increase in global demand, according to analysts.

The sector has seen encouraging signs, with a 30% rise in timber prices this year, but further demand from traditional markets, such as Japan, South Korea and Taiwan, is needed to provide a major boost to prices.

Japan used to take up to 40% of Malaysia’s timber exports but this currently stands at only 25-30%.

However, China is expected to be a big growth market, driven by construction related to the 2004 Olympic Games while demand from Taiwan, South Korea and the US is predicted to pick up once economic recovery gets underway.

Indonesia’s continued ban on plywood exports and its supply shortage is also seen as helping to sustain prices.

Malaysian timber exports amounted to M$2.16bn for the first half of 2002, down from M$2.26bn in the same period last year.