Reaction to the paper on: Contribution of the forest-based industries to sustainable development

1. Reaction to the paper on: Contribution of the forest-based industries to sustainable development Presented by Nicolaas K. de Lange Chairman, Chamber of Furniture Industries of the Philippines (CFIP) During the Philippine Forestry Development Forum June 2, 2005

2. The Philippine furniture industry An Industry we can be PROUD of! Philippine brands and designers gaining world renown. Filipino furniture makers recognized worldwide as best in design in Asia and unsurpassed in creative use of indigenous raw materials. Furniture exports has a increased by 5% in 2004 and latest figures show that the January-March export sales figures of 2004 and 2005 show an increase by 18%Furniture exports has a increased by 5% in 2004 and latest figures show that the January-March export sales figures of 2004 and 2005 show an increase by 18%

3. The Philippine furniture industry 98% of firms are MSMEs Employs nearly 800,000 workers plus 1M more in the sub-contracting network (CIDA-Pearl puts figure at 481,000 + 300,000 in Sub-con Sector)

4. Our economic contribution Contributes close to US$600M or PhP33B to the economy Provides government with roughly PhP450M in taxes from export companies alone Provides government with additional taxes through companies engaged in the domestic market and through income taxes on the 800,000 workers in the industry

5. Total vs. furniture exports (FOB in USD Mil) Total value of exported wood furniture in 2004 is US$127,914,584 or 43% of the total furniture exported. This is up by 11% from 2003 Total value of exported furniture using non-timber wood products is US$124,955,754 or 42% of the total furniture exported. This is down by 69% from 2003. Major gainers are plastic and stone furniture at 91% and 22%, respectively. Total value of exported wood furniture in 2004 is US$127,914,584 or 43% of the total furniture exported. This is up by 11% from 2003 Total value of exported furniture using non-timber wood products is US$124,955,754 or 42% of the total furniture exported. This is down by 69% from 2003. Major gainers are plastic and stone furniture at 91% and 22%, respectively.

6. Wood and other forest-based products account for 80% of the raw materials used by the industry Majority of these wood and non-wood forest products are sourced locally. It is estimated that the furniture industry needs about 364,000 cubic meters of wood annually. This does not yet include the non-timber forest products like rattan, bamboo, fibers and other vines, which are likewise and increasingly being used by the industry Local wood species currently being used extensively in the industry are: Lawaan, Gemelina, Mahogany and Rubber wood Majority of these wood and non-wood forest products are sourced locally. It is estimated that the furniture industry needs about 364,000 cubic meters of wood annually. This does not yet include the non-timber forest products like rattan, bamboo, fibers and other vines, which are likewise and increasingly being used by the industry Local wood species currently being used extensively in the industry are: Lawaan, Gemelina, Mahogany and Rubber wood

7. Our industry�s comparative advantage

8. Our concern Continued, stable and sustainable supply of raw materials, particularly wood and other forest-based products, which comprise 80% of the industry�s raw material requirements. WE DO NOT HAVE THIS SITUATION NOW! It is reiterated, raw material acquisition is considered one of the most critical factors in sustaining the furniture industry. Assurance of raw material supply for the industry is key to its survival and growth. The current situation is that there is disruption in the flow of raw materials, particularly wood and forest-based Raw material is considered one of the most critical factors in sustaining the furniture industry. Assurance of raw material supply for the industry is the key to its survival and growth. It is reiterated, raw material acquisition is considered one of the most critical factors in sustaining the furniture industry. Assurance of raw material supply for the industry is key to its survival and growth. The current situation is that there is disruption in the flow of raw materials, particularly wood and forest-based Raw material is considered one of the most critical factors in sustaining the furniture industry. Assurance of raw material supply for the industry is the key to its survival and growth.

9. Our recommendations Restore, in a responsible and sustainable way, the flow of the local forest-based materials supply chain Facilitate the flow of the imported forest-based materials supply chain

10. On the Issues, Problems, and Recommendations Presented in Dr. Dolom�s Paper Our Comments: Industry�s Standpoint

11. Unstable & Inconsistent Policies We concur that this issue has had a major impact on the forestry sector, the furniture industry and other wood dependent industries. Logging ban of Dec. 08, 2004 is prime example We have been advocating to government to adopt clear short-term and long-term policies on sustainable forest management with due consultation with all affected sectors and implement these accordingly Lack of such clear policies has left our industry in the dark and is making it difficult for us to work on short-term and long-term plans, especially for our raw material requirements

12. Development of Plantation Forests The furniture industry needs legal and sustainable sources of wood. Our positioning in the market requires it. We can use plantation timber, so we are in full support of developing this sub-industry. We feel it should be severely de-regulated, even be considered an agricultural crop. Security of tenure issues and financing support as well as incentives must be considered if the necessary investments in reforestation and Industrial Tree Plantations are to be obtained. We also support the dissemination of existing technologies (through trainings) specially to small tree farmers to increase their yield and improve the quality of lumber from tree plantations

13. On Diminishing Forest Resources Investment NOW in re-foresting natural forests and tree farms! Liberalize importation of wood products from global sources (Importation is viable, and currently the safest option) Reduce tariffs that average 7.5% on wood products Remove red tape on importation process (DENR, Customs Bonded Warehouses)

14. Legitimacy of Sources We have long advocated for a Certification System for our forest products. But this, in principle, cannot be managed by government. Who will take the lead in its development?

15. Non-competitiveness of Local Forest Products? Furniture makers actually prefer local wood because it is cheaper, faster to get, and available in smaller volumes than imported options Improving grading and drying processes will make local wood even more desirable, even at higher prices There is a demand, and Filipino suppliers should be able to beat the competition easily

16. In Closing . . . Our industry is capable of world class competition. BUT, we need a sustainable supply of quality raw materials. Government must make quick and hard decisions regarding local and imported raw material supply.

17. These actions are imperative as it will... Benefit many wood dependent industries, not only the furniture and furnishings sector Prevent more slowdowns in production and closure of companies Ensure that workers will preserve their current jobs Encourage companies to expand their operations

18. The time to act is now! JOBS AND BUSINESSES, LIVES AND LIVELIHOOD ARE AT STAKE!

19. Thank you.