BASELINE STUDY 5, Thailand - Forest Trends

6. THAI FOREST PRODUCTS MANUFACTURING INDUSTRY
6.1 Overview
The FAO estimates that two thirds of the 2,500 wood-based industries operating in Thailand are furniture producers
(FAO 2009:61-62). These manufacturers employ upwards of 260,000 people (11% of total manufacturing),
and paid out approximately US$560 million in wages and salaries. In addition, FAO estimates that there
were 3,000 timber traders, 242 smaller scale sawmills, over 5,000 smaller scale woodworking operations, 22
particle board mills, 4 hardboard mills, 7 medium-density fiberboard mills in 2004. Assuming these figures have
stayed roughly stable since 2004, plantations and wood processing can thus be considered as a strategic sector
for the Thai economy.
With increasing liberalization and decentralization trends in Thailand, the private sector plays a larger role in the
wood sector, furthering the gap between the public and private wood sector in terms of economic versus conservation
goals. These divisions are in part represented by the split between old conservation laws governing
the RFD and more recent regulations for the private wood sector, such as with customs and certification
schemes.
The private sector procures wood from several sources. For domestic plantation wood, companies can purchase
directly from smallholder tree farmers (as part of the RFD-sponsored programs), or directly from FIO (e.g.
teak). For natural wood of higher quality necessary for export trade, Thai companies import wood from other
countries.
Due to the more restrictive trading environment in Thailand compared to other countries in the region, Thai
wood companies are voicing increasing concerns, and even relocating to other countries such as China and Malaysia,
to secure cheaper raw materials and labor for export-oriented manufacturing.
All exported wood from Thailand must be value-added. No logs of natural trees of conservation value can be
legally exported. The one exception is that the FIO can legally export logs, usually teak (often, but not exclusively,
from plantations). Technically, the Minister of the Ministry of Commerce can give an exception to this law
and allow another agency other than FIO to export logs. So far, however, this has not yet occurred. Nonnatural/plantation
tree species of no conservation value, such as rubber and eucalyptus, can be exported in log
form, however.
6.2 Woodchips and Pulp and Paper Manufacturing
The largest segment of the wood processing industry in Thailand in terms of volume is clearly pulp and paper,
followed by sawmilling and particleboard. The pulp and paper sector consumes almost all of the annual eucalyptus
woodchip production in Thailand, with some volumes exported as woodchips. Overall pulp manufacturing
in Thailand is currently about 1.25 million metric tonnes per year (RISI 2008). However, some of these companies
(such as Panjapol Pulp Industry) rely predominantly upon access to recycled sources. The lack of capacity
expansion in the Thai pulp sector has facilitated modest increases in woodchip exports in recent years.
© EU FLEGT Facility, BASELINE STUDY 5, Thailand: Overview of Forest Law Enforcement, Governance and Trade, July 2011
This Action is funded by the European Union and the governments of Finland, France, Germany, the Netherlands, Spain and the UK. The views expressed herein
can in no way be taken to reflect the official opinion of the European Union.
www.euflegt.efi.int
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