VT Times, September 21, 2015
Furniture entrepreneurs hope to receive increased benefits for their businesses and create revenue for the country after the government prohibited log exports. The government also instructed that timber must be processed within the country before being exporting to foreign countries.
The Lao Furniture Association believed that local industry entrepreneurs would receive substantial benefit if the government was able to control log exports after the announcement, the association’s President, Mr Khamphay Somsana said. Furniture entrepreneurs would require less capital to buy wood to make furniture and for carving to supply the domestic and export markets, he said.
“One log can be made into different types of furniture and value added wood products which entrepreneurs can then sell and export, bringing higher returns than unprocessed logs,” said Mr Khamphay. All furniture and wood products exported pay tax to the government, while many log exports are not transparent resulting in tax revenue leakage. In previous years, the large volume of logs exported to neighbouring countries resulted only in relatively small amounts paid to the government budget. Furniture manufacturing also creates job opportunities and labour skill development within the country. The log export ban will also provide sustainable raw materials for making furniture and other wood products while improving the association’s strength. The shortage of raw materials within the country has been a major problem for furniture manufacturers’ operations with some forced to purchase wood from sawmills at higher cost, while some are buying from timber yards instead of using timber supplied under government-allocated quotas. In previous years, the number of sawmills increased due of the high value of wood but the details of how the timber was harvested from forests was not clear.
The demand for wooden furniture is high in both the Lao and foreign markets but supply is limited. There is a strong interest from the Chinese market for Lao furniture if the association is able supply products in sufficient quantities. The association has asked for 30 percent of the government’s annual wood quota to sustain their business but this has not been implemented.
Previously, the government banned log exports but exceptions were allowed when they approved foreign sales in special circumstances. According to recent reports, Laos has no statistics on the amount of wood exported as the government has been unable to collect the information from local authorities. Some government authorities are conspiring with timber businesses by forging documents that enable illegal logging. Lao furniture products are generating interest in foreign markets because they are made from high quality wood and many companies sell their products to other countries.