KUCHING: Reducing cost will be the state’s timber industry’s only option to survive and restore its competitive edge.
However, to achieve this, Sarawak Timber Association (STA) said it would need the state’s government support and assistance.
“It will be a win-win outcome. Apart from helping to sustain the well-being of the industry during this critical time, the government’s support and assistance would, at the same time, generate greater stream of revenue for the state government and its people,” STA said in a press statement yesterday.
The statement was issued after a meeting of STA plywood members and Sarawak Timber Industry Development Corporation (STIDC) chaired by STIDC general manager Hashim Bojet here yesterday.
The 15-member delegation from STA was led by STA permanent council member Datuk Seri Patrick Wong Haw Yeong.
The objective of the meeting was to discuss the critical issues facing the timber industry and how best the state government and STA members can work together to overcome the challenges faced.
STA said the biggest market for Sarawak plywood manufacturers is Japan.
However, Sarawak is gradually losing its market share to countries such as Indonesia, Vietnam and China who are able to sell plywood at cheaper price.
In addition, production of domestic plywood in Japan is increasing, incentivised by the Japanese government, it added.
According to STA, over the last few years, plywood production cost had skyrocketed due to increase in costs of raw materials and labour.
“Log cost has escalated by at least 22 percent since 2017 because of increase in Hill Timber Premium from RM0.80/m3 to RM50/m3 (hill timber species), Timber Premium (Rehabilitation & Development) from RM0.60/m3 to RM5/m3; glue cost has increased by 12 percent and administrative and distribution costs increased by 59 percent due to significant reduction in production volume.”
STA said the production cost was also attributed to the increase in minimum wage rate for Sarawak from RM920 to RM1,100 this year.
“Effective Jan 1 last year, a new ruling requires employers to bear the levy for foreign workers at RM1,010 per worker. Previously, the cost was borne by employees themselves. Such ruling has resulted in the increase in the cost of workers’ recruitment.
STA said its members were unable to pass on the added costs to their buyers.