To rebuild the economy from the Covid-19 losses, the government is exploring measures to export wood-based products, which would save more than 3 billion (B) revenue losses from import of these products.
The forest department has readied a “way forward” report on how to extract timber and produce wood products either as import substitution or export to countries like India and Bangladesh. The report will be submitted to the Cabinet next week.
Agriculture Minister Yeshey Penjor, said that Bhutan boasts about abundant forest resources while the import value of such products is mounting by the year. “We have imported 3.2B worth of wood and wood products.” According to trade statistics, import of wood charcoal last year has increased by Nu 1B and is among the top five commodities imported. The import value amounted to Nu 2,226.24 million (M).
But only 5 percent of Bhutan’s total forest area is currently used for commercial production. Chirpine forest, which constitutes 25 percent of the forest cover, is mostly explored for commercial purposes.
To begin with, 1.36M cubic feet of stock balance of timber with the Natural Resource Development Corporation Limited will be used after which the matured, old, and damaged trees from the annual allowable cut would be extracted.
According to estimates of the forest department, Bhutan has 5.08M annual allowable cut from which the plan is to extract about 25 percent from the forest management units, community forests and private forest.
Clarifying the article titled: “Bhutan considers exploiting forests to offset pandemic losses”, published in the thirdpole.net, Lyonpo said it was not an exploitation of the forest resources but sustainable harvest.
“We don’t have the capacity to extract all the annual allowable cut due to geographical terrain and other important issues like saving the catchment area,” Lyonpo said.
Broad-leaved forest, which constitutes 45 percent of the forest cover and is underutilised will also be explored for export.
Lyonpo said that to capture the market, the quality and cost challenges will be addressed through technology and expertise to make the products lucrative and compete in the international market. “We had been exporting wood products, but the revenue generated is insignificant.”
While forest rules and act ban export of forest products in raw forms, the finished forest products like particleboard, plywood, broom handle, railings, furniture, packing boxes, among others are exported.
Section 6 article 218 (2) of Forest And Nature Conservation Rules and Regulations Of Bhutan 2017 states: “Export of timber either in log or sawn form, or as firewood is banned,” while the offence in section 5 article 19 (b) of the Forest and Nature Conservation Act 1995 is punishable with imprisonment which may extend to 3 months or a fine equal to the fair market value of the forest produce illegally transported, imported or exported, or both.
Sustainable extraction would help in forestry management through thinning to improve forests’ health and ecological balance, Lyonpo said.
Currently, out of 160 wood-based industries in the country, only a few have ventured into completing the value chain through value addition.
The move is expected to improve business opportunities for saw millers to explore beyond just sawing the woods, Lyonpo added. He said that once the business picks up, Bhutan would be able to substitute imports of building materials which amounts to an import value of Nu 22M annually.
The government also plans to reduce the trade deficit of Nu 2.9 B from charcoal import. Through quality assurance, the ministry aims to increase the export value of the charcoals while also substituting import.
Due to the Covid-19 pandemic, the country’s Gross Domestic Product dropped to its lowest in August registering a growth of negative 6.7 percent. In the last five months, the country inflicted economic loss of about Nu 5B.
Sawmillers show support
Owners of wood-based industries welcomed the initiative. The president of the Association of Wood-based Industries, Phuntsho Wangdi, said that the move was sustainable and would bring about equitable regional development since people would be encouraged to open wood-based industries in the east, which has seen a dearth of it.
He said that until now the industries were not at a full working capacity. They had to compete with the cheap imported wood products. “We have the integrated operation system and at times we run out of materials, therefore, income opportunities.”
“Four ply industries had been running 40-50 percent capacity. Now we would be able to work at the optimum capacity and give opportunities for new industries,” he said.
The association has 140 registered members.
Bhutan is currently the only carbon-negative country globally—around 2.2M tons of CO2 equivalents are emitted every year, but because of its forests, more than 6.3M tons of CO2 are sequestered annually.