Lhakpa Quendren

Sarpang—Since the construction moratorium was imposed in Sarpang in April 2023, business of wood industries and sawmills in the district has come to a grinding halt, with a severe downturn in timber supply and production.

The moratorium has forced the wood processing industries to scale back operations, resulting in layoffs and a sharp decline in business turnover. With few alternatives, sawmills are now reduced to producing wooden crates for mandarin exporters, often at minimal profit margins to sustain their operations.

Currently, all seven wood-based industries in Sarpang—Samdrup, Namcha, and Zhonggar sawmills in Gelephu; and Kuenga, Khuju, and Phubgyel sawmills in Jigmeling and Sheychamthang—are struggling to move sawn wood and timber.

Gyaltshen Wood Industry in Gelephu has pivoted to producing plywood for export to India, having ceased the manufacture of block boards and flush doors.

Established in 2014, Phubgyel Sawmill once boasted a monthly net profit of Nu 400,000 to 500,000 during peak demand. Today, it limps along with an average monthly income of Nu 150,000, barely covering its Nu 160,000 loan repayment on a Nu 4.5 million loan from two commercial banks.

A sawmiller, Hom Nath Nepal, said that while the Covid-19 pandemic caused major disruptions, the construction moratorium further exacerbated the challenges, leading to nearly five years of business stagnation.

“Sometimes, I borrow money from clients for a short term without interest just to keep afloat,” he said.

His poultry farm with 3,500 chickens helps offset expenses, but declining egg prices in the market make it difficult to cover feed costs.

Despite receiving an order for 50,000 wooden crates from a mandarin exporter, he currently has only 22,000 crates in stock, resulting in a shortfall of Nu 150,000 against an advance payment.

The moratorium has forced wood processing industries to scale back operations, resulting in layoffs

Although crates are typically made from wood waste, sawmillers are now forced to buy logs at Nu 132 per cubic feet (cft), deepening their losses. “I even reached out to the Gelephu BCCI representative to explain our situation,” he added.

Hom Nath Nepal said that if these challenges persist, he may have to sell a plot in Singye gewog to repay the loan. He owns three acres in Singye and 60 decimals in Sheychamthang, Gakiling, where his house and sawmill are located.

Another sawmiller in Jigmeling, Kuenga Tenzin, said that his business has experienced a plunge in revenue due to the moratorium, with monthly earnings plummeting from millions to just a few thousand. “After the pandemic, there was a brief improvement, mostly from local clients,” he said.

His workforce has shrunk from 18 to just three workers now. “I had to halt exports because I cannot meet high-volume demand, and complying with forest regulations is burdensome without sufficient staff,” he said.

The construction moratorium’s ripple effects have also impacted hardware, fabrication, and construction businesses. 

The general manager of Gyaltshen Wood Industry, Jambay Dorji, said that there is no demand for flush doors and sawn timber due to the suspension of construction activities. “While wood is slowly being replaced by metals and other alternatives, there is still a market for timber,” he said.

The manager of Zhonggar Sawmill, Ugyen Thinley, said that when construction was active, their supply fell short of demand. “Now, we are unable to sell even a single cft of timber, which has forced us to start making wooden crates out of necessity.”

However, with the long-halted construction of the Gyalsung Center at Tareythang now refocused on agricultural-based Gyalsung Center, wood-based industries are optimistic about finding a market for their sawn wood and timber.

“When the construction of the Gyalsung center was ongoing, I was able to deliver 2,000 cft before the project was halted,” Hom Nath Nepal said.

Given that the other four Gyalsung centers across the country are still under construction, the Tareythang project has returned to Gyalsung to address accommodation shortages. The construction was halted last year after the project was repurposed for Gelephu Mindfulness City (GMC).

“I am optimistic about the GMC but also worried about our ability to participate, as the materials will require wood that lasts for centuries, which I believe is not available in our country,” said Samdrup Gyaltshen, a sawmiller in Gelephu.

The sawmillers attribute the shortage of timber supply to Natural Resources Development Corporation Limited (NRDCL) focusing more on timber exports.

To overcome the shortage, some sawmillers source logs from private land while others explore options to purchase from private timber suppliers.

Another issue affecting the industry is the delay in royalty payments from NRDCL to the Forest Department, coupled with a lack of loaders at the Bumthang source, which further hampers transportation. “There’s a lack of coordination between the Forest Department and NRDCL,” said one sawmiller. “The government needs to address this to improve the ease of doing business.”

The sawmillers used to supply sawn wood and timber to Thimphu, Paro, Punakha, Bumthang, Samdrupjongkhar, and Gelephu.