Cabinet approves export of wood products, a mega wood processing unit and possible import substitution

Extraction of timber problematic due to fragile geological condition, difficult terrain, poor accessibility and infrastructure

As recommended by the Ministry of Economic Affairs (MoEA) and the Ministry of Finance (MoF) in their reports to open up the timber industry and have a bigger wood based industry in the country, to help the economy recover from the COVID-19, Department of Forest and Park Services (DoFPS) under the Ministry of Agriculture and Forests (MoAF), presented a report to the Cabinet stating that despite a high forest cover and huge potential, there are challenges in bringing the potential forest areas under production management because of difficult terrain and poor accessibility.

According to the Forest Resources Potential Assessment of Bhutan (FRPA) 2013, about 16 percent (432,520 hectares [ha]) of the total forest area is estimated to be suitable for sustainable management. The total growing stock of Bhutan’s forests is estimated at 1,001 million (mn) cubic meter (m3). The average growing stock per ha is 261 m3 as per the National Forest Inventory Report (NFI) 2016.

The annual increment of the entire forest of Bhutan is 5.79 mn m3 which can be potentially harvested on a sustainable basis. However, this increment volume is distributed throughout the country, and extraction of timber may be challenged by difficult mountainous terrain, poor accessibility and infrastructure, further worsened by the fragile geological conditions, and ultimately the venture may incur huge investment costs.

As a result, there may be myriad environmental issues, such as landslides, floods, erosion, etc. if felling of huge forest areas on the mountain slopes has to be carried out to harvest the entire annual increment volume.

DoFPS stated that considering the challenges, a huge investment would be required to harvest the total annual increment of 5.79 mn m3. Timber production can be increased by carrying out thinning of existing forests, especially in blue pine forests.

Though the total volume contribution of larger diameter class trees is higher as compared to smaller diameter class, the number of trees per hectare for larger diameter class is relatively low.

The report states, “Therefore, most timber from thinning operations could come from smaller diameter classes falling below 60 cm in terms of numbers while thinning in especially broadleaved forest with large diameter trees may result in large openings.”

In case of large openings, immediate reforestation may have to be carried out to ensure adequate restocking of the forest. Presently, the Wood-based Industries (WBIs) in the country are not able to optimally utilize pole size timbers. Therefore, NRDCL and WBIs should explore for optimum utilization of pole size timbers and minimize timber wastage, said DoFPS.

DoFPS stated that the establishment of a mega processing unit would incur huge establishment costs, in terms of infrastructure and skilled manpower, wherein Foreign Direct Investment can be looked into to fund it.

Further, considering the intensity of investment, the long-term sustainability of such processing units needs to be assessed carefully. Already integrated WBIs such as Ongdi Timber Industries, Menjong Wood Works and Druk Wood Manufacturing Group exist, and has the potential for further expansion to medium or large-scale processing units.

“The review of available online resources shows that Bangladesh and India are the largest importer of wood and wood products in the SAARC region. Studies have projected SAARC to remain as net importer of wood and wood products for at least next 15 years. Taking advantage of the good trade relation of Bhutan with both the countries, there is a foreseeable opportunity to export finished and semi-finished wood products to India and Bangladesh. However, consultation with stakeholders and WBIs indicated that India is the only major/potential timber export market for Bhutan at present,” the DoFPS stated.

Currently, there are around 136 sawmills including 16 mobile sawmills and 6 integrated wood processing units, most of which are located in the western part of the country.

There are about 441 WBIs in Bhutan, as per the records maintained by DoFPS, which include 231 furniture units. Private individuals/enterprises mostly operate the WBIs in the country.

Meanwhile, Agriculture Minister Yeshey Penjor said that timber resources in the forest is depleting fast unless the country mechanizes itself to have a sustainable harvest.

“We have a lot of timber wastage in sawmills but opening integrated wood based industries with latest technologies can help in reducing the wastage of timbers as low as 3 percent and as per our study, timber wastage in the country is as high as 37 percent,” the Agriculture Minister said.

Lyonpo said, “When we claim, ourselves, to be forest rich, we are still importing housing components. It’s because our local products lack in quality and quantity. So why not improve our wood based industries and produce enough quantity and good quality? So the consumer’s reliability on the local products will be better, and if we import latest machines and technologies we can employ our youth and we don’t have to spend our hard earn rupees and dollars.”

Lyonpo added the ministry received Cabinet approval to promote the wood based industries in the country. 

“We will be working towards that and we will be requesting all the traditional saw millers to upgrade themselves. For the time to come, we will not encourage new sawmills if it is just a sawing mill,” Lyonpo added.

The Cabinet issued its directives on export of finished and semi finished wood products, establishment of a mega wood processing unit and possible import substitution on 8 December.

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