Furniture association waits on wood supply
Furniture association waits on wood supply
The Lao Furniture Association has yet to receive a quota of timber allocated by the government which it will use to make furniture for export, even though the quota was granted in February.
“We haven't collected any timber because the provincial administrations are still considering wood supplies for other buyers groups that are owed wood from last year,” Mr Bounyenh Sithisakd, a consultant at the association said on Monday.
The association had its requested quota of 80,366 cubic metres of timber for use by its 57 members approved in early February.
“I think that it will be difficult for us to get the wood that was granted by the government because we don't have much time left to receive it,” Mr Bounyenh said.
“Some provinces asked us to cooperate with provincial administrations for the purchase of timber again next year.”
“Many provincial administration officials say that next year the provinces will act on the Prime Minister's order for the quota of timber supply to the furniture association.”
“We will have to report the issue to the government on why we have not obtained any wood from the quota that was granted,” he said, adding that “We hope that the government will not cut that quota out and we also trust that they will grant us the quota again next year.”
He said the association's members are currently buying wood from timber shops and warehouses and this has driven up the cost of production. They even had to buy scraps of wood that were discarded by sawmills and found it difficult to acquire sufficient supplies.
The quota is expected to cost the association about 64 billion kip (US$8 million); and this is the first year they have received an allocation for the wood it supplies to its members.
The wood must be used to make furniture and should not be sold in the form of logs or timber. If any members are found to have made mistakes, they will be penalised according to the relevant regulations and laws.
Once the association has this wood in stock, it will enable factories and association members to sign purchase agreements with overseas buyers in Asia and on other continents, such as Europe.
The association had planned to make furniture for export to China and India once it secured approval of the wood.
The group needs a direct supply of raw materials from the government after signing a cooperation agreement with a Chinese furniture importers' group in October 2011 and a memorandum of understanding with an Indian buyers' group last year. The Indian group requires about 600 cubic metres of wood per month initially. The products include plywood and window and door panels.
The agreement with the Chinese group will see the production of furniture worth up to 2.6 trillion kip (US$333 million) per year for supply to the Chinese market over the next 20 years.
In the past the association often encountered problems with foreign markets. Buyers were really keen to sign purchase agreements with the association but they didn't dare to go ahead because it hadn't got a quota of wood from the government.
vientiane times
