The Thai timber and furniture industry will hear a falling sound come 2015 as regional competition from the Asean Economic Community (AEC) eats into revenue, says Jirawat Tangkijngamwong, chairman of the Thai Timber Association.
"We are at a disadvantage in all areas of the timber industry and cannot compete with Vietnam, Malaysia and Indonesia once the AEC is set up," he said.
Thailand has banned exports of processed wood since 1987, while current laws focus mainly on wood conservation.
Mr Jirawat, also deputy managing director of Deesawat Industries Co, said the government does not support industries related to timber, whether it be financial institutions or the Board of Investment.
He said the government should adjust laws to help the industry while providing loans and know-how to enter new markets.
Thailand is a net importer of timber, with 10 million cubic metres of imports per year.
Four million cu m of timber is planted domestically.
Mr Jirawat said the demand for legal wood is rising, especially because next year the EU's new Forest Law Enforcement, Governance and Trade regulation will start.
The new rule prohibits the placement of illegally harvested timber and products derived from such timber in the EU market.
The Industrial Works Department estimates there are 12,000 wood traders and manufacturers in Thailand, with 2,700 located in Bangkok.
The Office of Small and Medium Enterprises Promotion puts the number of wood traders and manufacturers at 80,000 businesses, of which 95% are SMEs.
Mr Jirawat said that as many as 50 factories close down every year.
He said most business operators in the industry have yet to understand the AEC and are not ready to change.
"There is no way we will be ready for the AEC, as we like to solve problems at the last minute," he said.
Furniture exports this year are expected to contract by 5%. For the first half of this year, figures have dropped by almost 20%.
Furniture exports last year totalled 34 billion baht, while timber exports totalled 80 billion.
Timber exports increased by 10% year-on-year in the first half of this year.
The US is the top export market for timber and furniture, and Europe is third, so downturns in those economies have hurt.
Exports to those two regions have dropped by more than 10 billion baht per year.
"While we're seeking new markets, we have not left our existing markets and in fact need heavier marketing," said Mr Jirawat.
About the author
- Writer: Nanchanok Wongsamuth
Position: News Reporter