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Laos Log and Sawnwood Export Ban: Impacts on the Vietnam–Lao Timber Trade

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Laos Log and Sawnwood Export Ban: Impacts on the Vietnam–Lao Timber Trade Forest Trends Report Series: Forest Policy, Trade, and Finance Laos Log and Sawnwood Export Ban: Impacts on the Vietnam–Lao Timber Trade Phuc Xuan To and Kerstin Canby, Forest Trends March 2017 With Support from: About Forest Trends Forest Trends works to conserve forests and other ecosystems through the creation and wide adoption of a broad range of environmental finance, markets and other payment and incentive mechanisms. Forest Trends does so by 1) providing transparent information on ecosystem values, finance, and markets through knowledge acquisition, analysis, and dissemination; 2) convening diverse coalitions, partners, and communities of practice to promote environmental values and advance development of new markets and payment mechanisms; and 3) demonstrating successful tools, standards, and models of innovative finance for conservation. This report was released by Forest Trends’ Forest Policy, Trade, and Finance program, which since 2000, has sought to create markets for legal forest products while supporting parallel transformations awy from timber and other commodities sourced illegally and unsustainably from forest areas. Forest Trends 1203 19th Street, NW 4th floor Washington, DC 20036 www.forest–trends.org Table of Contents 1. Introduction .................................................................................................................................................................. 1 2. Logs ............................................................................................................................................................................... 3 Impact of the Ban on Log Exports to Vietnam ................................................................................................................................. 3 Active Crossings for Log Imports ..................................................................................................................................................... 5 Key Log Species being Exported from Laos to Vietnam ................................................................................................................ 6 3. Sawnwood .................................................................................................................................................................... 7 Impact of PM15 on Lao Sawnwood Exports to Vietnam ................................................................................................................ 7 Active Border Crossings for Sawnwood Imports ............................................................................................................................. 8 Key Sawnwood Species being Exported from Laos to Vietnam .................................................................................................. 10 Annex 1: Vietnam Imports of Logs from Laos PDR by Volume, by Month, 2010-2016 ..................................... 11 Annex 2: Vietnam Imports of Logs from Laos PDR by Value, by Month, 2010-2016 ......................................... 12 Annex 3: Vietnam Imports of Sawnwood from Laos PDR by Volume, by Month, 2010-2016 ........................... 13 Annex 4: Vietnam Imports of Sawnwood from Laos PDR by Value, by Month, 2010-2016 .............................. 14 List of Figures Figure 1: Vietnam Imports of Lao Logs and Sawnwood, 2010-2016 ............................................................................. 1 Figure 2: Vietnam Imports of Lao Logs, 2010-2016 ........................................................................................................ 3 Figure 3: Vietnam Imports of Lao Logs by Month, 2010-2016 ........................................................................................ 3 Figure 4: Value of Vietnam Imports of Logs from Laos, 2010-2016 ............................................................................... 4 Figure 5: Average Reported Price of Vietnam Imports of Lao Logs, 2010-2016 ........................................................... 4 Figure 6: Vietnam Imports of Lao Sawnwood by Volume, 2010-2016 ........................................................................... 7 Figure 7: Vietnam Imports of Lao Sawnwood by Volume, by Month, 2010-2016 ......................................................... 7 Figure 8: Vietnam Imports of Lao Sawnwood by Value, 2010-2016 .............................................................................. 8 Figure 9: Vietnam Imports of Lao Sawnwood by Value, by Month, 2010-2016 ............................................................. 8 List of Tables Table 1: Vietnam Imports of Lao Logs by Border Crossings in 2016 (Vietnamese Side of the Border) ....................... 5 Table 2: Top 10 Log Species Imported into Vietnam in 2016 (1,000 m3 or over) .......................................................... 6 Table 3: Vietnam Imports of Lao Sawnwood, by Border Crossings in 2016 (Vietnamese Side of the Border) ........... 9 Table 4: Top 15 Sawnwood Species Imported into Vietnam in 2016 (1,000 m3 or over) ............................................ 10 1. Introduction In May 2016, the Government of Lao PDR enacted a Prime Ministerial Order (PM15) to ban the export of logs and sawnwood, with the express aim to help control the country’s high deforestation rates and boost Laos’ domestic wood production industry. This followed a Notice issued in August 2015 (No. 1360) prohibiting the export of raw logs. Effects of these regulations are now being felt by the Chinese timber industry, which has seen an almost immediate decline in the availability of logs and sawnwood from Laos. Effects of the PM15 are now being felt by the Vietnamese timber industry, which has seen an almost immediate the decline in their ability to import logs and sawnwood from Laos. Lao exports of logs and sawnwood to Vietnam have respectively plummeted to 11 percent and 25 percent of their 2015 levels (Figure 1). Figure 1: Vietnam Imports of Lao Logs and Sawnwood, 2010-2016 Source: Vietnam Customs statistics, compiled by Forest Trends. The aim of the Lao log and sawnwood export ban was both economic and environmental. Exporting logs and sawnwood does not provide much added-value. Requiring timber to be processed into semi-final or finished products in the country before they are exported creates jobs and enables higher sale prices (and taxes). It also serves to check the country’s challenge with combatting illegal logging and associated trade: it is more difficult for illegal timber harvesters to illegally “cut-and-run” with raw logs stolen from a country’s forests when a log must be transported to a domestic mill, where nearby roads and checkpoints can be more closely monitored. For more than the past decade, Vietnam had been the largest market for Laos timber products (primarily unprocessed logs or lightly processed sawnwoods) and Laos was the single-most important source of raw materials for Vietnam’s wood processing industry. After Vietnam’s partial natural forest logging ban in the 1980s, and the recent complete logging ban, the import of raw materials from neighboring countries became increasingly important as Vietnam’s timber product manufacturing industry ramped up to become one of the world’s global hubs. This report identifies the impact of the Lao government’s log and sawnwood export ban introduced last May by analyzing 2010-2016 Vietnam’s Custom Statistics for the imports of logs and sawn wood into Vietnam from Laos. Highlighted findings include: 1 1. The log and sawnwood export ban appears to have had its intended effect, at least with regards to exports to Vietnam and China.1 The total volumes of logs and sawnwood exported to Vietnam in 2016 dropping to only 11 percent and 25 percent of 2015 volumes respectively. 2. Despite the substantial declines in Lao log and sawnwood exports to Vietnam some trade continues – particularly in the highest value and rare species such as rosewood. In 2016, more than 30 percent of Lao logs imported into was rosewood. About 80 percent of the exported sawnwood was rosewood. This trade declined but did not cease after the ban. 3. Multiple inland border crossings are being used for the export of Lao logs and sawnwood to Vietnam, even after May 2016 when the ban was introduced. Much of the trade crossed at the major international and national border crossings, but secondary/supplementary border crossings (some of them newly opened) controlled by local authorities were also used – reflecting a power fragmentation between central and local levels, and presenting a challenge for law enforcement authorities, particularly on the Lao side. 4. Statistics from Vietnam Customs have allowed Forest Trends to identify specific border crossings between Laos and Vietnam which have continued to allow logs and sawnwood pass into Vietnam. Identification of these specific checkpoints provides ample opportunities for the national and local governments in Laos to collaborate and to close the power gaps between the national and local levels. Pressure to modify the ban has been looming due to several reasons. There is an existing stockpile of 100,000-150,000 m3 of logs and sawnwood, already purchased by Vietnamese traders, that were harvested (some allegedly illegally) prior to the announcement of the ban (valued at least US$40-80 million).2 Vietnamese traders have been trying to find ways around the ban to bring these stockpiles to Vietnam, as they represent a huge loss for the Vietnamese traders. Without the large export demand for sawnwood, Lao sawmills are running
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