Ta Ann rides on higher demand from Japan market for Pefc-certified plywood products
KUCHING: Ta Ann Holdings Bhd is riding on the upward demand for PEFC (Programme for the Endorsement of Forest Certification) certified plywood products in the Japanese market to push for increased sales.
The company is working closely with buyers in Japan to promote its certified plywood products to enlarge the market share, according to group managing director Datuk Wong Kuo Hea.
He said Ta Ann is focusing on increasing the Pefc-certified coated concrete panel (CCP) plywood production volume this year given the underlying upward demand for certified products in Japan.
“On a positive development, the Tokyo metropolitan government has officially announced to use certified materials for public projects.
“Some of the developers in Japan have given directives in their procurement policy to use certified materials only for their projects. To this, we anticipate a surge in demand for our certified plywood products,” he said in the company’s 2019 annual report.
Wong said the full certification of the group’s three forest management units (FMUS) covering 345,000 hectares under the Malaysian Timber Certification Scheme (MTCS) had played a vital role which enables the group to further raise the production of certified plywood products. The third FMU was certified on March 16, 2020.
(The MTCS is the first tropical timber certification scheme in the Asia-pacific region to be endorsed by the PEFC.)
With the certification, the group could make its log operation sustainable in terms of the supply of the MTCS-PEFC logs to both its plywood mills and sawmills as well as for logs export market.
“The full certification of our forests will place the group in a much stronger position in terms of market competitiveness,” said Wong.
In 2019, Ta Ann group’s total plywood sales amounted to about Rm176.4mil, out of which only Rm21.8mil or about 12% was from Pefccertified eco plywood. The group produced 103,260 cubic metres of plywood, a decline of 19% from 2018’s 127,661 cubic metres in Malaysia. Sales volume fell 35% to 81,800 cubic metres from 125,954 cubic metres yearon-year.
Last year, Japan accounted for 88% of Ta Ann group’s plywood exports against 91% in 2018. About 10% of the exports went to Australia and the remaining to other overseas markets.
Market turmoil
Wong said Ta Ann’s plywood division had been hit by more substitute products in the market, coupled with competition from Japanese domestic plywood supply.
“Alongside the dropped market demand, the plywood division had to tussle with unsettled Japanese market turmoil resulting from the port congestion.
“Nevertheless, our plywood products will not be replaced totally whereby we are continuously developing and exploiting our plywood market.”
Wong said given the current market under the Covid-19 pandemic scenario, the group had taken proactive action in adjusting its plywood production in order to cater for the market demand so as to avoid an overstocking position.
He said Ta Ann’s 2020 action plan for the plywood division includes enhancing cost-saving measures and recovery rate, upgrading the existing machinery to improve efficiency and employing more automation processes.
The group is also working to value add on the waste veneer into saleable products.
On the group’s logging business, Wong said with the certification of the three FMUS, the benefits and log supply sustainability are guaranteed and realised over a long-term licence tenure of 60 years.
In 2019, the group raised its log production volume from natural forest by 50% to 268,911 cubic metres while export logs sales was doubled to 94,495 cubic metres from 43,049 cubic metres in 2018. About 90% of the export logs went to India, 8% to Taiwan and 2% to Vietnam.
Wong attributed this to the 40% export volume quota and special export volume of 36,000 cubic metres awarded by the Sarawak government in recognition of its attainment of forest management certification, coupled with the overall improved logging efficiency following the revised log harvesting methodology undertaken by the group which gears towards sustainable forest management.
The Sarawak government has made it mandatory for all long-term timber licensed areas to obtain forest management certification by 2020 to ensure that forests and their resources are managed sustainably and meet international requirements.