Malaysia’s main trading partner - China

ITTO's Tropical Timber Market Report
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The Malaysia External Trade Corporation recently reported that China continues to be Malaysia‟s largest trade partner.

In 2012, trade between Malaysia and China amounted to RM180.6 billion (approximately US$58.6 billion), an increase of 13 per cent compared with the previous year. Of this total, Malaysia‟s exports to China were worth RM 88.75 billion (approximately US$28.8 billion) and imports from China RM 91.86 billion (approximately US$29.8 billion).

The main reason cited for the trade imbalance was the declining price of commodities such as palm oil and rubber, both of which were exported to China.

VPA to be concluded by year end
Malaysia‟s Ministry of Plantation Industries and Commodities has indicated it hopes to conclude negotiations and sign the Voluntary Partnership Agreement (VPA) with the European Union (EU) by yearend. The national news agency BERNAMA quoted the ministry's advisor, Dr Freezailah Che Yeom as saying "One of Malaysia's initiatives to ensure an uninterrupted flow of wood exports to the EU until the VPA is concluded includes the Malaysian Timber Legality Assurance System."

In a recent workshop on timber legality assurance, representatives of the European Forest Institute (EFI) said Malaysia has made good progress in drawing up its legality assurance system as a first step in the VPA process. The workshop was organised by the EU FLEGT Facility and the ASEAN Secretariat and attracted some 70 participants from seven ASEAN countries, the EU and

The workshop provided an opportunity for participants to exchange experiences as well as explore increased collaboration on timber legality among agencies and stakeholder groups in Southeast Asia. In addressing the workshop the EU Ambassador and Head of Delegation to Malaysia, Luc Vandebon, said "Countries that have Forest Law Enforcement, Governance and Trade (FLEGT) VPAs with the EU will be able to export their timber on a fast "greenlane" because EU timber operators are looking for an assurance that the timber they place on the market is legally harvested."

The EU, a key market for value-added timber and timber products such as furniture, is Asia's second largest export market for sawn wood and plywood.

Malaysia's timber and timber product exports to the EU last year were worth RM20.197 billion (approximately US$6.6 billion). Ambassador Vandebon said strengthening forest governance should be a priority in implementing effective policies to conserve and sustainably manage resources so as to reduce unintended deforestation.

Sarawak plywood exporters encouraged by growth in Japanese demand
The Star newspaper reported Shin Yang Group executive director, Wong Kai Song as saying Japan's higher housing starts this year had spurred demand for imported woodbased panel products. Shin Yang is the largest producer of panel products in Sarawak with six plywood mills.

Japan is increasing imports of plywood from Sarawak as reconstruction activity has gained momentum in coastal towns devastated by the earthquake and tsunami two years ago. “Japanese housing companies are now very busy with reconstruction work although they are facing a shortage of carpenters. This year's new housing starts in Japan were around 900,000 units, which is about 10% higher than 820,000 units last year,” Wong said.

Statistics from the Sarawak Timber Association show Japan imported 1.44 million cubic metres of plywood from Sarawak in 2012, compared to 1.31 million cubic metres in 2011. About 55% of the state's total export of 2.64 million cubic metres last year went to Japan. Sarawak's total exports of plywood in 2012 were 16.5% higher than the 2.27 mil. cubic metres in 2011.

Wong said the average price of Sarawak plywood in the Japanese market rose by about 15% to US$550 (RM1,670) per cubic metre in the first quarter of this year thanks to the stronger demand. “There is another 5% to 10% upside potential in the price,” he added, in anticipation of further growth in Japanese demand.

Anti-dumping duty little impact on Sarawak plywood exports to S. Korea In 2012 South Korea increased its imports of plywood from Sarawak by 38% to 331,600 cubic metres up from 239,900 cu m in 2011. This was despite the imposition of an anti-dumping duty on Malaysian plywood which remains in force.

The anti-dumping duties imposed by South Korea on eight Sarawak and one Sabah plywood exporters range from 5% to 38% and will remain in force until February 2014.

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