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Friday, July 19, 2024

Laos Explores Growth Opportunities in Wood Processing Industry through EU, Regional Cooperation

This Week

As the wood processing industry in Laos is poised for significant growth in export value and economic development, the Lao government has been working with partners from the European Union and Southeast Asia to strengthen the regulatory and institutional framework of the forestry sector.

To this end, the Department of Forestry organized a workshop in collaboration with the EU-backed International Trade Centre’s Arise Plus project to outline the country’s priorities within the Lao Wood Processing Strategy and Export Roadmap. The discussions also delved into strategies for addressing challenges arising from the European Union’s Deforestation Regulation and its implications for the wood sector in Laos.

Under the EU Regulation, any trader who aims at putting on the EU market forest-sourced products such as soy, palm oil, wood, cocoa, coffee, rubber, and furniture, will need to prove that they “don’t originate from recently deforested land or have contributed to forest degradation.”

Laos, like other major exporters in Southeast Asia, including Indonesia, Malaysia, and Vietnam, faces challenges under the EU Regulation requiring traders to demonstrate that forest-sourced products comply with deforestation standards before entering the EU market.

In a bid to fortify Laos’s wood processing industry and enhance its global competitiveness, a delegation from the country participated in a knowledge-sharing session with Indonesia’s Environment and Forestry (KLHK) Ministry on 23 October in Jakarta. The focus of the session was Indonesia’s effective implementation of the Legality and Sustainability Verification System (SVLK), showcasing its positive transformational impact on the forestry sector.

The now-mandatory SVLK, developed over a decade ago, involves Conformity Assessment Bodies (CABs) conducting audits of business units or wood products and requires all timber from state-owned and private forests to obtain verification of legality. This process is closely monitored by the community and non-governmental organizations, acting as independent watchdog groups. 

Agus Justianto, the director-general of sustainable forest management at the KLHK Ministry, highlighted the pivotal role this system has played in combating illegal logging in Indonesia, which was a significant threat across the country in the early 2000s. The system resulted in a 75 percent reduction in deforestation over the past three years, according to the minister.

Indonesia’s success story extends to its record-breaking export value of forestry products, reaching USD 14.21 billion in 2022 despite the challenges of the COVID-19 pandemic. This result led to the signing of a voluntary partnership agreement with the European Union to facilitate the issuance of licenses exempting Indonesian wood products from the due diligence process under the European timber regulation.

In the meeting with the Indonesian delegation in Jakarta, Director-general of the Forest Inspection Department of the Laotian Ministry of Agriculture and Forestry, Khamphone Mounlamai, mentioned that Laos aspires to reach a similar partnership agreement with the EU in the near future.

As the Lao wood processing sector holds the potential to drive economic growth, the country is actively boosting its partnerships with the European Union and regional players, slowly thriving in the global wood market.

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