Research and analysis

Burma: Forests

Published 20 October 2014

This research and analysis was withdrawn on

This publication was archived on 4 July 2016

This article is no longer current. Please refer to Overseas Business Risk

0.1 Summary

Burma’s rich forest resources have lined crony pockets for decades. Massive deforestation and gross mismanagement are now, however, giving way to reform. The UK has been asked to support transformation of a low-value and illegal timber trade into one that can support poverty reduction.

0.2 Detail

Background

Forests are an important natural resource in Burma. 70% of Burma’s 51 million people live off the land and 17 million are classified as ‘forest dependent’. With its land mass, low population density, reasonable waterway infrastructure and proximity to important international markets, effectively managed timber could make a very significant contribution to livelihoods and strengthen the political and economic reform processes.

Burma has a long and proud history of effective forest management dating back to the 1850s. This reputation is no longer justified; illegal logging makes up an estimated 80% of the total, poor rural people are excluded from the timber market, a government company operates a monopoly, and the wood processing industry contributes little to the national economy. Illegal logging has been linked with organised crime and conflict in ethnic areas and the industry is rife with cronyism. Total forest cover is now estimated at 47%, down from 65% in 1925, and forest loss has increased to an estimated 488,000 hectares a year since 2010.

Reform

Reform is in the air however. The Burmese Government introduced a log export ban in April 2014 in an effort to revitalise the processing industry, control illegal logging and aid the peace process by stemming ethnic area income from logging. The ban has met with some success in terms of log seizures. The government is also revising the community forestry regulations, which should bring local communities into an official timber economy.

Timber exports used to be a main source of foreign currency for the military regime, but recent oil and gas tenders have given the sector some breathing space. The timber trade is currently dominated by India (over 50%) and China (approximately 25%). Although EU and US trading sanctions have been lifted or suspended, importers in both markets have been hesitant. This may begin to change with the recent one-year licence issued by the US Treasury for the US International Wood Producers Association to trade in Burmese wood products.

UK Role

The Burmese Government has requested the UK support the transformation of its timber trade into one that can support poverty reduction. DFID is already supporting work on community forestry through its ‘Pyoe Pin’ civil society programme, and the DFID-funded Livelihoods and Food Security Trust Fund (LIFT) is also planning on stepping up its engagement on climate change. The EU is trying to make progress on the Forest Law Enforcement, Governance and Trade (FLEGT) process, which should provide grounds for greater transparency and sustainability. In spite of some progress, FLEGT badly needs better in-country leadership. Under DFID’s Forest Governance, Markets and Climate Programme, resources have been allocated to address this.

The potential benefits of FLEGT to Burma are numerous. It has a track record of providing access to interest groups that have been excluded from policy-making processes. A legally compliant forest sector should increase tax revenue, strengthen the rule of law, increase investor confidence in the sector and provide the foundations for a sustainable contribution to the economy. It will also provide significant environmental benefits and an entry into forest land tenure reform as well as a market-driven approach to conflict reduction.

Indonesia is a good example to draw on, where UK support has led to the establishment of a Timber Legality Verification System and the signing of a Voluntary Partnership Agreement with the EU which certifies that Indonesian exporters are using legally sourced timber. This work has seen over 20 million hectares independently audited and over 800 factories successfully awarded certificates to trade in timber products to the EU, worth an estimated USD 1 billion per annum.

0.3 Comment

Many Burmese foresters see the UK as the natural partner in developing a sustainable future sector. We are now identifying the most effective way to play this role, drawing on network experience in Indonesia.

0.4 Disclaimer

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