KL to suspend export levies on plywood

KL to suspend export levies on plywood

KUALA LUMPUR (AFP): Malaysia, whose plywood exporters have accused Indonesian counterparts of undercutting prices in global markets, yesterday announced it was temporarily lifting export levies on plywood.

"In view of the current market developments, the government has approved the removal of the export levy of 40 ringgit (US$16) per cubic meter on utility plywood from Saturday," Primary Industries Lim Keng Yaik said.

Lim gave no reasons for the suspension, but industry officials see it as a move to allow local exporters to compete with Indonesian counterparts they say were dumping plywood and driving down prices in international markets.

International plywood prices have plunged by more than 30 percent in the past two months to $400 per cubic meter from $600 previously, officials said.

The Malaysian government had since 1990 imposed timber export levies, the rates of which were revised in October last year, to ensure adequate supply to local wood processors and the booming construction and housing sectors.

But in August this year, the Malaysian Panel-Products Manufacturers Association called for a removal of the levy, charging that Indonesia's price undercutting practices in world markets had caused the slump in prices.

The association's president Chai Fook Loong said local exporters had asked their Philippine counterparts to mediate in the "timber war", after failing to get Indonesia to cooperate in the interest of the Asean Panel Products Federation (APF).

Indonesia, with exports of some 10 million cubic meters of plywood a year, accounts for 90 percent of the world plywood trade, while Malaysia's exports average two million cubic meters a year.

But Indonesia sees timber-rich Malaysia as a threat as it is steadily making inroads into lucrative markets like China.

Malaysia is the only country that imposes a levy on export of plywood in the APF, which groups Malaysia, Indonesia, the Philippines, Thailand and Singapore.

Brunei, a member of the Association of Southeast Asian Nations (ASEAN) is not in the APF.

Lim said the government was reviewing the rates for the export of other timber products and hope to announce a decision on completion of the review in January.