02 February 2009

Report from Malaysia: decline in timber business expected after Chinese New Year

Malaysian prices continued to decline as the global economic slowdown continued. BTimes indicated that the price decline was further aggravated by the worst slump in US lumber prices in almost 18 years and shares of Malaysian timber companies were equally negatively affected. However, the full impact of the drop in prices was paused due to the closure of businesses during the annual Chinese Lunar New Year celebrations.
Nevertheless, the decline in prices is expected to persist after the New Year festivities.

Low growth of GDP anticipated in 2009
Analysts expected Malaysia’s GDP growth to be between 1.1% and 2.2% in 2009 as the national economy contracts, reported Bernama News. Unemployment is expected to hit 4.7% and market conditions continue to be bleak. The Malaysian Ringitt fell for the third week in the wake of speculations that the central bank will cut interest rates to stimulate economic growth and aid local exporters.

DRC cancelled contracts could provide Malaysia with opportunity
The Independent reported on traders’ hopes that Malaysian sawnwood suppliers can fill the void created by the cancelled contracts in the Democratic Republic of Congo (see West/Central Africa section). However, the EU, one of the major destinations for timber from the DRC may prove to be elusive for Malaysian timber suppliers as EU shares fell to a six-year low, according to The Guardian.
Government decides to reduce export of natural rubber Btimes reported on Malaysia’s decision to reduce the export of natural rubber by 5% to 57,050 tons in year 2009. As a result of this measure, more rubber plantations can be replanted or converted into alternative commercial projects. This would mean that more rubberwood would be available as raw material, thus reducing pressure on