PNG WOOD EXPORTS TO ASIA DWINDLE

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By Anton Huafolo

PORT MORESBY, Papua New Guinea (The National, Nov. 16) –Despite the government's export-driven recovery program, Papua New Guinea's forest industry is losing market share in some Asian countries and export volumes have dwindled.

Statistics provided by the PNG Forest Industries Association (FIA) reveal that PNG has not been able to maintain its market share in its traditional log export markets of Japan and South Korea.

However, according to FIA's executive officer Bob Tate and industry representatives, increased gains have been recorded for China from 1997 to 2003.

Mr Tate said that gradual and sustained rise of log exports to China from 8 percent in 1997 to 65 percent in 2003 was due to a fast-growing Chinese economy resulting in increased demand for low-value tropical hardwood.

However, he predicted that PNG's log exports to China would decline in the long-term as the economy cools off, over-valuation in currency sets in and self-sufficiency in wood production and import substitution.

There is also aggressive competition from New Zealand, the United States, Canada and South Africa to supply the Chinese wood market.

Japan's purchase of PNG lumber, from the statistics provided, declined considerably.

According to Mr Tate, this is due to Japanese factories shifting from tropical hardwood to temperate softwood, which meant that factories had to change their machinery and infrastructure to accommodate these changes.

Mr Tate stated that the volume of log exports prior to 2003 was negligible as taxes imposed on high-value logs from PNG impacted production and output.

Mr Tate pointed out that the 1997 volume of exports of PNG logs was 3 million cubic metres, and as the effects of the Asian financial meltdown and currency crisis set in, export volumes declined to 1.5 million cubic meters in 2001.

In 2002 and 2003, export of 1.85 and 1.8 million cubic meters were recorded, respectively.

This year, up till Aug 2004, exports were 1.05 million cubic metres, and are expected to rise to 2001 levels of 1.5 million cubic metres.

November 17, 2004

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