MTC is taking a more targeted approach, instead of a one-size-fits-all solution, as MTC has to carefully recognise the areas with the best potential for the industry, said Khairul.
Economic recovery across South Asia, the Middle East and Africa unlock new business opportunities
THE gradual return to normalcy for countries in South Asia, the Middle East and Africa is set to drive demand and new trade opportunities for timber and timber-based products.
Malaysian Timber Council (MTC) South Asia, Middle East and Africa international business development division director Khairul Anwar said that moving forward, the council will pitch into the market potential of specific cities, rather than an overall region, to find the best potential for the country’s timber players.
“We’re taking a more targeted approach instead of a one-size-fits-all solution, as for us in MTC, we have to carefully recognise the areas with the best potential for the industry,” he said.
> South Asia
The South Asia region is forecasted to grow by 7.1% in 2021 and 2022, owing to the rebound of global demand and targeted containment measures to help minimise the economic impact of the Covid-19 waves, thus translating to projects with a trickle-down effect for Malaysian timber companies.
The International Monetary Fund retained India’s growth projection of 9.5% in 2021 and 8.5% in 2022 as a result of an increase in public investment and incentives to boost manufacturing.
In turn, this signals a rapidly growing market in terms of demographics, which will help propel the demand for timber-based products. Khairul also highlights that Mumbai and Goa holds many new opportunities due to its robust manufacturing and tourism sectors.
Nepal’s economy is anticipated to grow by 4.1% in the fiscal year 2022, up from an estimated growth of 2.3% in 2021, while in Bangladesh, the continued recovery in exports and consumption will help growth rates improve to 6.4% in the fiscal year 2021 to 2022.
Khairul sees Nepal and Bangladesh as upcoming markets for Malaysian timber products, as the country’s population is now transforming itself with higher purchasing power across projects for residences, offices, tourism and overall infrastructure.
As tourism activities pick up in the Maldives, its gross domestic product (GDP) is projected to grow by 22.3% in 2021, while Sri Lanka’s economy will remain on a recovery path in 2022 with real GDP expanding by 4.1%.
“Malaysian interior décor, including wood-based furniture, are admired for their durability and quality, with rising demand for value-added timber products from high net-worth individuals in the South Asia region,” he revealed.
The resurgence of hardwood prices is likely to continue through 2022, including an increase in sawn timber prices due to improved demand from hotel and resort renovation in the Maldives, as well as five-star properties in India and Sri Lanka.
Furthermore, there has been a steep rise in housing demand from millennials opting for work-from-home offices and expanding home ownership of women, thus Malaysian manufacturers must adapt to these ‘new norms’ by introducing innovative wood and furniture designs to prospective buyers.
On timber products that are gaining popularity in the region, he pointed to finger-jointed laminated boards (FJLB), engineered flooring, glue-laminated products and oriented strand boards that have been gaining momentum among the specifiers and architects.
He added, “Innovative oil palm trunk products will be introduced to the buyers to showcase their efficacy and utility.”
> Middle East and Africa
Meanwhile, the Middle East is seeing trillion-dollar projects from the United Arab Emirates (UAE) and Saudi Arabia, which are two countries in the region that MTC is looking forward to next year.
UAE estimates 1.2% GDP growth in 2021 and 2.5% in 2022 to 2023, to be further driven by government as well as private expenditure, while Saudi Arabia will be supported by firmer global oil demand with GDP growth expected to reach 2.4% in 2021.
The latter is also looking to move away from an oil-based economy through diversification efforts in education and eco-tourism.
The Gulf Cooperation Council economies are generally expected to return to an aggregate growth of 2.2% in 2021, according to the latest issue of the World Bank Gulf Economic Update. Which means countries such as Oman, Qatar, Bahrain, Turkey and Iran will likely improve their sourcing activities from Malaysia, added Khairul.
Timber products that are highly sought-after for the Middle East region are panel products, sawn timber, home furniture and furniture components.
The medium-term outlook for Mauritius is a strong recovery with real GDP growth projected to average 7.1% over the next two years, while Kenya’s economy is projected to grow by 5.0% in 2021 and 5.9% in 2022. For South Africa, real GDP growth is projected at 3.0% in 2021.
“Africa is an interesting region, especially Kenya, as an untapped market with a lot of promise. MTC is crafting potential marketing events to benefit our industry in those developing markets.
“With an optimistic forecast of the respective economies in the aforementioned Middle East and African countries – which have been among the top export destinations for Malaysian timber and timber products for the past decade – MTC forecasts improved buying power and better requirements for timber and timber products from the region,” he said.
Developing markets for Malaysian timber products in the African countries including Egypt and Algeria, projected an optimistic outlook especially for sawn timber, panel products, FJLB, engineered flooring, decking, home and outdoor furniture, as well as furniture components.
Leveraging MTC’s initiatives
It is now time for Malaysian timber companies to regain lost ground in the markets of South Asia, the Middle East and Africa, via MTC’s programmes and initiatives.These include business-to-business (B2B) matchmaking and industry dialogues to engage with important timber trade communities and provide updates on current developments, as well as physical and virtual exhibitions.
Khairul shared, “Once international travel restrictions are removed, we will move forward with a renewed focus on our promotional activities, including outward marketing missions and international events.”
“We will continue to hold virtual events for exchange of ideas and networking to encourage greater Malaysian timber companies’ interaction with potential international stakeholders,” he said.
