MTC to unlock the potential and prospects of timber exports across East Asia, Americas and Europe
WITH the gradual recovery of the economies of countries around the globe, the Malaysian Timber Council (MTC) is poised to capitalise on new growth opportunities arising from the paradigm shift caused by the Covid-19 pandemic.
“In general, the current market presents unprecedented and distinct opportunities in terms of consumer products for the West and industrial products for the East,” said MTC East Asia, Europe and Americas international business development division director Tan Ting Wai.
He explained that governments in the West are giving out sizeable cash relief, which has led to rising demand for consumer products; while countries in the East are seizing on the “golden opportunity” in demand from their western counterparts to produce, thus requiring raw materials and industrial products from the timber industry.
> East Asia
In the first three quarters of this year, China’s gross domestic product (GDP) grew by 9.8% year-on-year, reaching 82.31 trillion yuan (RM54.25tril). It is forecasted to reach 8% this year.
Meanwhile, Japan is forecasted to see a 2.5% growth rate for the 2022 fiscal year, with its GDP likely to recover to pre-Covid-19 peak levels between April and June.
“With domestic Covid-19 resurgence from time to time, China’s economic recovery will be uneven and unstable but shows a growing or recovery trend as a whole,” he said, adding that both China and Japan’s export figures are also showing an encouraging trend this year.
He shared that there are opportunities in supplying value-added semi-finished and finished products like outdoor furniture to China.
He added, “As the raw material price is increasing alongside shipment cost, the production cost in China is rising.
“In addition, as the environmental protection regulations are becoming stricter, the manufacturing industry in China is facing lots of challenges and a joint venture with overseas manufacturers is preferred, especially for the preliminary processes.”
> Americas
A major market for Malaysian furniture, the United States (US) represented 47.8% of total Malaysian furniture exports last year, fuelled by vibrant home building and remodelling activities since the start of the pandemic. This trend will continue with more potential for growth in 2022, Tan said.
The future housing and home furnishings market will mostly be driven by Generation Zs and millennials purchasing new homes, hence increasing the demand for exterior and interior home furnishings.
Existing homeowners will also follow the same pattern, which will lead to remodelling activity propelling demand for tropical hardwood, especially for residential construction and renovations.
“The furniture market is expected to be good in the US. It is believed that wood materials will continue to be a sought-after material for US homebuyers, as business is being primarily fuelled by vibrant home building and remodelling activity.
Tan also said that there is good demand for residential moulding, decking, commercial millwork, flooring and furniture. Makers of stairs and stair parts are also purchasing steady volumes of tropical hardwood.
> Europe
Meanwhile, Europe’s GDP is estimated to grow by 4.4% in 2021 and 3.8% in 2022, with huge demand for timber that is coloured by the climate debate and the trend towards local and ecological products.
Construction across the continent is set to grow by 4.1% in 2021, 3.4% in 2022 and 2.4% in 2023 to reach an annual market value of €1.73 trillion. Residential building is forecasted to grow by 4.7% and civil engineering by 5.2% this year.
Malaysia’s market share for tropical timber has dropped, in part due to supply issues in Malaysia during the various movement control orders and compounded by a severe lack of shipping containers.
Noting that the market potential of this region can be improved if European requirements are met, he said that there are many opportunities for Malaysian timber companies to supply all types of furniture, sawn timber, laminated scantling and mouldings.
While Germany, the Netherlands, Belgium, United Kingdom and Italy have been traditional markets for Malaysian timber and timber products, MTC is also working on expanding its efforts to new potential markets such as Poland and Greece, among others.
“Another potential area for growth is the Paris Olympics 2024 where neighbouring countries are seizing this opportunity on the expected surge of tourists to the region,” Tan explained.
He added that Malaysian timber companies can tap into the opportunity to supply building materials for the construction of the Olympic structures and facilities if their supply of timber is certified by the Forest Stewardship Council.
Challenges to overcome
For the East Asia and Americas market, the challenges lie in ensuring a steady supply and sufficient labour and grabbing opportunities at the right time amidst the possible resurgence of Covid-19 that could likely disrupt production at factories.
Conversely, for the European market, the challenge is in market access. With the European Commission set to review the effectiveness and impact of existing regulations, various countries across the continent are implementing their respective regulations to govern the efficient usage of resources in the move towards a clean and sustainable circular economy that will restore biodiversity and reduce pollution.
Tan advised, “With today’s fast- changing trends and fashion, the Malaysian timber industry players need to proactively communicate with their buyers.
“As windows of opportunity can be small, companies had better encourage their staff to take the vaccine and increase the vaccination rate, as well as improve the standard operating procedures so that production is not hindered.”
To tap into the opportunities present in the East Asia, Americas and Europe markets, the Malaysian timber companies are encouraged to participate in activities organised by MTC, such as trade exhibitions and trade missions for business visits, to further enhance Malaysia’s presence in these markets.
Over the years, MTC has also introduced various programmes that align with the Government’s direction to shift Malaysia up the global supply value chain, as well as exploring markets with new potential.
“Automation especially plays an essential part in translating these efforts into actual outcome.
“With technological advancement, it will strengthen Malaysia’s presence to a higher level with more competitive advantages on the global stage,” Tan said.