OIL PALM TRUNK: 18 MILLION LOGS AND LETS USE IT

BY

Dr. Jalaluddin Harun and Dr. Loh Yueh Feng

Malaysian Timber Industry Board

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Overview of Malaysia Timber Industry

WORK FORCE

More than 160,000 workers

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MARKETExport : RM 20.52 billion

Domestic : RM 13 billion

Total : RM 33.52 billion

INVESTMENT

Domestic: RM 518.7 million

FDI : RM 64.7 mil

Total: RM 583.4 mil.

Export Contribution

2.67 % from RM 766.13 billion

MALAYSIA: CONTRIBUTION OF TIMBER INDUSTRY (2014)MALAYSIA: CONTRIBUTION OF TIMBER INDUSTRY (2014)

Rank

LOGS SAWNTIMBER MOULDINGS PLYWOOD FURNITURE

World 16,948,244 World 35,083,849 World 4,723,525 World 14,988,594 World 83,321,876

1 USA 2,444,078 Canada 7,443,597 China 647,720 China 5,034,169 China 28,873,765

2

New Zealand

1,928,883 Russia 3,652,328 Indonesia 508,960 Indonesia 2,176,213 Italy 7,719,308

3 Russia 1,640,995 Sweden 3,276,474 Brazil 470,118 Malaysia 1,690,139 Germany 7,558,015

4Myanmar 1,392,734 USA 3,080,051 USA 322,160 Russia 995,172 Viet Nam 3,931,239

5 Canada 886,490 Germany 1,939,400 Chile 272,945 Finland 636,364 Poland 3,621,847

6

Papua New Guinea

725,562 Finland 1,893,071 Poland 252,760 USA 444,692 USA 3,180,183

7 Malaysia 593,836 Austria 1,505,207 Germany 226,554 Brazil 429,229 Canada 2,111,557

8

Czech Republic

501,361 Romania 940,534 Malaysia 198,843 Austria 281,240 Malaysia 1,778,763

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Solomon Islands

437,474 Thailand 900,522 Italy 176,439 Germany 270,672 Sweden 1,659,777

10 Germany 358,242 Chile 812,531 Austria 128,252 Chile 253,562 Denmark 1,437,544

11 France 346,506 Malaysia 798,960 Canada 125,437 Canada 222,629 Spain 1,379,677

Malaysia’s Export Ranking For Timber Products & Furniture, 2013

5Source : DOSM, JPSM, Sabah FD,MID Sabah, STIDC

*comprising pulp & paper, matches, pencil, wooden pallet

MALAYSIA : WOOD-BASED MILLS (2013)

6Sumber: DOS & MTIBSumber: DOS & MTIB

Total: RM 20.5 BillionTotal: RM 20.5 Billion

PlywoodRM 5,199 Million

25%

Other ProductsRM 870 Million

4%

Wooden FurnitureRM 6,328 Million

32%

Rattan FurnitureRM 35 Million

0.17%

Builders Joinery & Carpentry

RM 1,000 Million5%

Chipboard/Particleboard

RM 306 Million2%

VeneerRM 304 Million

1%

MouldingsRM 711 Million

3%

Wooden FrameRM 123 Million

1%

FibreboardRM 995 Million

5%

SawntimberRM 2,545 Million

12%

LogsRM 2,073 Million

10%

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NATIP - NATIONAL TIMBER POLICY (2009-2020)

17 FEB 2009PUTRA WORLD TRADE

CENTER (PWTC) 7

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NATIP Targets by 2020

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Thrusts of NATIP

NATIP Thrusts

Thrust 5:Human Capital Development

Thrust 3:Innovation & Technology

Thrust 7:BumiputeraParticipation

Thrust 4: Marketing & Promotion

Thrust 1:Industry Structure Thrust 2: Supply

of Raw Materials

Thrust 6:Funding & Incentives

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NATIONAL TIMBER INDUSTRY POLICY (NATIP) 2009 - 2020

Trust 2: Raw materialTrust 2: Raw material• Alternative raw material – kenaf, oil palm, bamboo• Encouraging the use of biomass as a supplementary resource

• Alternative raw material – kenaf, oil palm, bamboo• Encouraging the use of biomass as a supplementary resource

Trust 3: Innovative andtechnology

Trust 3: Innovative andtechnology

•To remain competitive, the industry needs to develop high quality and specialized products forniche market•To improve the R&D to inculcate the elements of creativity and innovation

•To remain competitive, the industry needs to develop high quality and specialized products forniche market•To improve the R&D to inculcate the elements of creativity and innovation

Trust 4: Marketing andpromotion

Trust 4: Marketing andpromotion

•Enhancing market creation through branding based on quality, design, and value creation

•Establishing and promoting the ‘green’ image•Intensifying the marketing of potential/new product

•Enhancing market creation through branding based on quality, design, and value creation

•Establishing and promoting the ‘green’ image•Intensifying the marketing of potential/new product

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OIL PALM TRUNK

• The annual availability of oil palm trunk is estimated 18 million trees (27 feet) or 10 million cubic meter on average130,000 hectares of replanting each year (2015-2032)

• Due to depleting supply of timber, oil palm has become the important alternative raw material

• Oil palm tree is a rich resource of lignocellulosic raw material and can be used for various applications in wood industry e.g. Plywood, sawn timber, particle and fiber-based products.

• Rapid growth of oil palm industry in Malaysia.

1990 (1.7 MILLION ha) 2014 (5.3 MILLION ha)

1212

Malaysia: Total Oil Palm Replanting Area

Source: MPOBSource: MPOB

Average replanting area in year 2015-2031= 130,000/year

1313Source: MPOBSource: MPOB

45,275 ha

56,961 ha

34,184ha

1414

Availability of Oil Palm Trunk

Source: MPOBSource: MPOB

Availability of oil palm tress 2015-2031 = 18 million logs/year

1515

Year

2015 ~ 2020 2021 ~ 2026 2027 ~ 2032

Area due for replanting (ha) 593,528 958,925 805,892

Number of felled oil palm trunks 80,719,808 130,413,800 109,601,312

Amount of plywood produced (m3) 19 Million 31 Million 26 Million

Value Plywood (RM) 21 Billion 34 Billion 29 BillionAmount of Sawn Timber Produced (m3) 4 Million 6 Million 5 million

Value Sawn Timber(RM) 8.8 Billion 13 Billion 11 Billion

Forecast of Oil Palm Trunk Supply, Plywood and Sawn Timber productionin Malaysia from 2015 to 2032

BUSINESS POTENTIAL

Source: MPOB and MTIB

1616

AVERAGE VALUE PER YEAR BY REGION

Sabah Sarawak Peninsular Total

Replanting Area 56,961 34,184 ha 45,275 ha 131,390No. of tree 7.75 mil 4.65 mil 6.16 mil 18 milValue for Plywood (RM) 1.8 mil. m3

RM2 billion1.1 mil. m3

RM1.2 billion1.4 mil. m3

RM1.6 billion4 mil. m3

RM4.8 billionValue for Sawn Timber (RM)

370k m3RM0.8 billion

222k m3RM0.5 billion

294k m3RM0.6 billion

886k m3RM1.9 billion

TARGET AND WAY FOWARD

CURRENT PRODUCTION OF OPT PLYWOOD 2014

Items RM/panel RM/m3

OPT log 10.51 297.96Tropical hardwood face veneer 5.50 155.98Resin & chemicals 4.80 136.13Salary/wages 9.66 273.95Electricity & utilities 1.76 50.00Repairs & maintenance 0.95 26.91Total Cost 33.18 940.93

Cost of production (RM/panel) of 12-mm-thick plywood

Profit: 10-17% of production cost

Furniture plantsFurniture plants2,2652,265SawntimberSawntimber

996996

MouldingsMouldings328328

Kiln drying/preservation Kiln drying/preservation plantsplants215/99215/99

Plywood/veneer Plywood/veneer mills/mills/blockboardblockboard

218218

MDF mills MDF mills 1414

4,217 4,217 MillsMills

OthersOthers8484

Source : FDPM, FD Sabah, FD Sarawak

KPPKMALAYSIA : WOOD-BASED MILLS (2013)

2020

TARGET PLYWOOD PRODUCTION IN 2020

• Baseline: RM54 Million (2014), target annual growth of 30% to achieve RM150 million by 2020

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Palm Tree Palm sawntimber Palm FurnitureRM250 RM 1,100 RM 3,000

VALUE CHAIN - PALM FURNITURE

Palm Tree Palm plywood Palm FurnitureRM 140 RM 1,100/m3 RM 5,000

Furniture making by local industry

Furniture making

New Design of Palm Furniture Prototype

by Designer Mobili under TANGGAM MTIB

by Designer Mobili under TANGGAM MTIB

CHALLENGES & WAY FOWARDSCHALLENGES & WAY FOWARDS

1. Plantation policy for extracting the oil palm trees

2. Inherent property of oil palm wood for proper processing and utilization-More R&D

3. Old plywood and sawmills require modification to process oil palm trunk

4. Require more market promotion of this new OPT products

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Contact us:Malaysian Timber Industry Board

Fibre and Biocomposite Development Centre (FIDEC)Lot 152, Jalan 4, Kompleks Perabot Olak Lempit

42700 Banting, Selangor, MalaysiaE-mail: fidec@mtib.gov.my

Tel: 603-31491502 Fax: 603-31491607