Furniture makers are continuing to push the government to ban exports of unprocessed timber in the face of increasing uncertainty in the supply of raw materials, according to a business representative.
“We will keep repeating our demand until the government stops exports of unprocessed timber,” Lao Wooden Furniture Association Vice President Mr Yothin Vetsaphong said in an interview with Vientiane Times yesterday regarding the furniture business in Laos.
The government first initiated a policy to ban the export of unprocessed timber a few years ago to guarantee supply for local furniture makers for the export market. So far, however, this policy has not been widely followed.
The government had asked furniture makers to modernise their operations in return for guaranteed quotas of timber as they believed some older plants were using wasteful systems.
Mr Yothin said a number of manufacturers invested large sums of money to modernise their plants, and are disappointed that the government has not yet guaranteed their timber quotas.
“Some furniture makers sold land and other assets to upgrade their businesses in line with the government's request but they are now facing shortages of raw materials and profit margins are shrinking,” he said.
The spokesman also said some furniture makers have had to turn down contracts with foreign businesses due to the uncertainty in the supply of timber.
“There is foreign demand for our furniture but we cannot sign purchasing agreements because we don't know if we will have sufficient raw material to maintain production,” he said, adding that furniture makers face financial penalties under contractual agreements if they don't deliver on time.
Mr Yothin also said some producers have resorted to seeking wood from illegal sources. However they are still unable to enter into contractual agreements as this supply source is also uncertain.
The government-approved timber quota is 200,000 cubic metres per year.
Wooden furniture made in Laos is exported mainly to China, Vietnam and Thailand. Some European countries also import furniture from Laos but prefer timber from sustainable sources.
Ministry of Industry and Commerce officials admit the industry is facing a shortage of supply.
However, they are not currently able to provide a concrete solution as the issue crosses over into other related sectors.
The Ministry of Agriculture and Forestry is responsible for the management of timber quotas by transporting timber from the forest to designated storage areas. The Ministry of Industry and Commerce is responsible for distributing timber from the storage areas to processing plants.
By Times Reporters (Latest Update Febuary 11, 2011)
