Myanmar’s timber industry has long lined the pockets of loggers, both legally and illegally. In recent times, however, deforestation has spun out of control, and the vast forests of the country’s landscape are gradually shrinking. According to the Ministry of Natural Resources and Environmental Conservation’s Forestry Department, 58% of the country was covered by forest in 1990, but by 2010 this figure had fallen to 47%. Deforestation has mainly been caused by illegal loggers who earn millions of untaxed dollars degrading the country’s valuable forests and selling the timber to neighbouring China.
While the demand for Myanmar’s wood species has mainly been driven by its resource-hungry neighbours of China and India, the highly regarded domestic teak can often be found decking the most expensive super-yachts across the globe. The London-based Environmental Investigation Agency (EIA) reported in late 2016 that a Swedish court had banned a teak importer from further sales after it found the company could not prove how the wood had been harvested or cut prior to purchase from the Myanmar Timber Enterprise (MTE) as required under the EU Timber Regulation, and it is hoped this will encourage the MTE to significantly improve transparency within its supply chain.
Yet industry players warn this is only a first step in a long process. “Policy measures taken to hinder illegal logging have not had the desired impact. Ultimately, legitimate organisations that abide by international practices have suffered, while illegal deforestation has continued. This has forced various companies to seek opportunities elsewhere, which has resulted in the government losing out on tax revenue,” Pawan Sharma, country manager at Mayar India, told OBG. “There is a restriction on the outturn percentage – ranging from 65 to 80% – for exports, which limits company revenue and translates into lower export tax collection for the government,” he added. The export of valuable hardwoods across the country’s Myanmar-Sino land border was a key foreign exchange earner in previous years and fetched an impressive $400m in 2011. While the handing over of power to a quasi-civilian government in 2011 has brought about much change to the logging industry, in the form of legislation, the ability of the government to curb illegal logging activities has not gained much ground. According to Ministry of Commerce data, the value of wood products exported overseas amounted to $947m in 2013/14. This figure does not account for illegal trade. According to the EIA, from 2001 to 2013, illegal exports accounted for 16.5m cu metres, a net value of $5.7bn. In a report titled “Data Corruption” by the EIA, numbers suggest that 72% of logging was done illegally from 2000 until 2014.
In an effort to slow the rate of deforestation, the MTE introduced a ban on the export of logs, beginning in April 2015. This has had little impact on the illegal trade segment, however, with trade estimated to be worth more than $400m annually with the Yunnan province alone. Following the export embargo, the government implemented a nationwide logging ban for 2016/17. This included mountain ranges in Rakhine, Shan and Kachin states, while a logging ban of 10 years was imposed on the Bago Yoma mountain range. The wholesale ban is expected to be lifted in 2017, but the MTE will maintain a tight grip on production.
During 2017/18, it is expected that 19,000 teak trees and 530,000 other hardwood trees will be legally logged. Production will be restricted to 15,000 tonnes of teak and 350,000 tonnes of hardwood, according to the Myanmar Times. The good news is that the rate of deforestation is on the decline, according to the UN Food and Agriculture Organisation, with forest coverage standing at 42.92% in 2015. However, illegal activity continues to belittle the efforts of the country’s policymakers.