The timber industry has declined by 18% in the first half of 2017, according to Mohindra Chand, General Manager of Barama Company Limited (BCL), who also says a rebound is expected by next year.
“The timber industry as a whole experienced a decline of 33% last year and in the first half of 2017, experienced another 18% decline and you have to remember we had some fallouts, Barama being the major one,” Chand told Stabroek News.
With respect to factors that are affecting the industry, Chand emphasised that the implementation of the 14% Value-Added-Tax on value-added products is still having a negative effect.
“That is the main concern and the most burning issue for us and it’s not only Barama but the entire forest industry,” he said, while pointing out that prior to the tax, which was put into effect in February, the industry was able to compete with the imported panels.
He added that while the local finished products were about 16% less than the imported ones, now the price gap is significantly less and in many instances the prices for the local products are higher than the imported ones.
To address the situation, the government has decided that all importers of pinewood would have to have a special permit. However, Chand related that such a move was only going to address the legality of the source for the logs that was being imported and wouldn’t have much effect on the market itself.
“The wood sector of Guyana [is] having [a] good response from government towards the commitment to buy locally produced products in their housing and infrastructure drive come 2018 and even for existing projects for 2017. So, government is responding well to that and we are eager to see what will be in the national budget in terms of housing and infrastructure development,” Chand said.
He also noted that the industry is also eagerly awaiting what moves will be made towards addressing concerns, such as the VAT on the value-added products and other issues that would have been raised by the stakeholders from the forest industry.
In addition to the removal of VAT, Chand added that there is a need for there to be more incentives in the industry.
Meanwhile, Chand explained that although BCL is not in the business of cutting logs from the forest anymore, it is now operating its value-added factory at full steam and has noted gradual increases in the local market.
“We have been opening up market opportunities for local log suppliers over the last three months and more. We have opened up market opportunities for local log suppliers for plywood species and several regions have been benefitting from this new market access,” Chand said, while explaining that the company has been purchasing logs from the local suppliers and has been making plywood that is being exported.
As a result of BCL’s support for the local suppliers, Chand said, it has rejuvenated the timber business in regions 10 and 2 and it is expecting similar results in regions 5 and 7. With the new flow of business on the local logging market, Chand also pointed out that they have created in excess of US$700,000 in business from what they have bought from small loggers.
“The number is only going to go up because I am expecting production to increase this month and next year it should be higher. As production goes up, more logs will be bought and this is just the infant stage. We see that our efforts alone can help to maybe stymie the decline [of the forest industry] or even reverse it if possible,” Chand said.