Regional Environmental Technical Assistance 5771
Poverty Reduction & Environmental Management in Remote Greater Mekong Subregion (GMS) Watersheds Project (Phase I)

TIMBER TRADE AND WOOD FLOW–STUDY

Thailand

By

Dr. Sompetch Mungkorndin

Tuukka Castrén

CONTENTS

List of Tables

List of Figures

List of Boxes

Abbreviations used

1. Introduction

1.1 Background

The current study on the wood demand and supply, and forest industries in Thailand is a part of the Poverty Reduction and Environmental Management in Remote Greater Mekong Sub-region Watersheds-project and its Timber Trade and Wood Flow-study. This study is one of the six country studies – one for each project country – that are produced during the project. A separate regional report studies the cross bordercross-border issues and opportunities in the whole of the subregion.

This report – like all the national reports – deals with three interrelated topics:

1. general pattern of wood use and demand/supply in the country
2. timber trade to/from the country
3. forest industries and the role of forest industries in the national industrial strategies

The study was prepared by two members of the project team of consultants from November 1998 – January 1999. Some additional data were collected and the report produced later in April 1999. The team on this study consisted of

• Dr. Sompetch Mungkorndin (Kasetsart University) – National Consultant
• Mr. Tuukka Castrén (Indufor Oy) – International Consultant

Dr. Sompetch collected most of the data and the report was produced jointly by the team. The work of the Consultants was supervised and assisted by Mr. Stephen Devenish, the team leader of the project.

1.2 Data

The intention of the study is not to assess detailed volumes or the structure of wood utilisation and trade in Thailand, but rather to facilitate the visualisation of the pattern in wood and primary wood product trade. Taking into consideration the accuracy of data available in all the project countries, any attempt to gain detailed information on actual volumes traded would be ineffectual for, among others, the following reasons:

• inaccuracy and inadequacy of the official statistics,
• much of wood consumption is local, household level utilisation goes largely unrecorded,
• domestic subsistence use does nor even pass through market mechanism, viz. products are not valued in monetary terms,
• illegal supply (logging and imports)

The data has been collected from a number of sources, from both official statistics and informal communications with various stakeholders. The official sources have consisted of, among others, trade, industrial and other economic statistics. The forest inventory data, though limited, has proved to be a valuable source of information

The consultants have also interviewed a large number of people who have shared their knowledge of the forest utilisation in the country. The list of personal contacts is presented in Annex 1. All conclusions and recommendations, however, are entirely those of the consultants.

2. Forest Resources

2.1 Natural Forests

Thailand has had a logging ban in natural forests since 1989. The ban was originally imposed as a result of the devastating floods the southern parts of country; commercial logging was seen by the public as the main culprit of the floods. This view is not, however, shared by all forestry professionals in the country. Nevertheless, since then only imported and plantation wood has officially been used by the industry.

The logging ban has not been able to prevent forest cover loss in the country, and deforestation has continued at an annual rate of 1.4% (1989-95). In some areas the rate actually increased marginally after the logging ban. (Table 2.1)

However, the deforestation rate has declined in recent years. In 1997 forest cover was only marginally below that in 1996. This practical halt in forest cover loss is concurrent with the emergence of the Asian financial crisis. Whether the slowdown is purely due to the Crisis has yet to be seen.

Source: Royal Forestry Department (1997), Royal Forestry Department (1998)

The loss of forest area has been mainly contributed to by two factors:

1. illegal logging, and
2. clearing land for agricultural purposes. This in turn may be divided to two categories: i) shifting cultivation, and ii) permanent agriculture

These two factors are, in no way, mutually exclusive. The normal pattern is that first the [illegal] loggers open an area both by logging and even building roads making the area more accessible for encroachment by land hungry rural dwellers. Encroachment takes place even in virgin forests but the first stage of logging eases the process by increasing accessibility of the area. Additionally, once the biggest trees have been logged, land clearing becomes less resource consuming.

2.2 Plantations

Forest Plantations

In order to overcome the problem of diminishing forest resources both the private and government sectors have initiated plantation establishment schemes.

The total gross area established by the State and parastatals until 1997 was 870 000 ha. Of the total, only 107 000 ha (12%) has been established since 1992. The annual areas established have been declining annually from 1992, in that year the area was 33 000 ha while in 1997 it was a meagre 6 700 ha. The decline cannot be rationalised purely by the economic crisis as the decline of annual plantation areas started in 1993, well before the Asian Crisis of 1997. Thai statistics report only reforestation under Royal Forestry Department (RFD ) supervision and ignore fully private plantations. The Thai government has had a policy of putting the private sector increasingly in charge of production plantations and only providing advice and some subsidies but not implementing the plantation activity itself. (Figure 2.1)

Another source of uncertainty on the existing plantation areas is that the plantation data is on the planting carried out, not the plantation area survived. No detailed inventory of the plantation areas has been carried out. The estimations of the survival rate range from 33 to 57%. Thus, even at best the net plantation area would be only half of the cumulative area planted.

Figure 2.1: State-assisted Reforestation and Plantation Establishment (1000 ha)

Source: Royal Forestry Department (1998), Royal Forestry Department (1997)

The lack of any recent plantation area inventory also inhibits the analysis of the species structure of the plantation area. Secondary information on the utilisation of plantation wood concentrates on teak and eucalyptus which appear to be the main plantation species.

The first large-scale teak plantations were established in the mid and late-1960’s by the Forest Industry Organisation (FIO, the commercial arm of the RFD). The rotation period was set at 30 years and thus the first areas have become mature for logging. The initial experiences indicate that the plantations are able to provide medium quality raw material for the industries. Both the yield and quality are, however, inferior to the natural teak forests.

After the initial trials by the FIO, the private sector initiated teak plantations. The long rotation period and lack of initial cashflow, however, curtails its attractiveness. Poorer farmers have no possibility of waiting thirty years for the revenue. Teak is mostly planted as part of agro-forestry systems and on some commercial plantations. Data on private plantations is scarce. In a projection made in 1995 the private eucalyptus plantations were estimated to cover 35 000 ha and in year 2000 the area would be much higher, 75 000 ha.

Rubberwood Plantations

Rubberwood has become the lifeline of Thai wood industries and the country has been a forerunner in the development to utilise the trunks of the mature rubber plantations. The trunks are replanted as the latex yield declines after some 25 years of tapping. Previously, and even still in some other rubber producing countries, the trunks were seen as waste and burned on-site or sold to locals for fuelwood at best.

The vast majority of the plantations are located in the southern part of the country where natural conditions are more favourable. In total the planted area in 1996 was 1.83 mill. ha. up from 1.73 mill. ha in 1987.

Latex is still the primary product of rubber plantations, only in the very last years of rotation management may the wood be optimised in view of wood production rather than latex yield. Hence rubberwood plantation management is subject to more variables than ordinary forest plantation management, namely prices and demand for latex. In 1996 rubberwood logging was 10.5 mill. m³ which was utilised as follows:

Due to the latex residues in the wood material rubberwood does not have favourable pulping properties and is not widely utilised in pulp and paper industry.

3. Utilisation of Forest Resources

3.1 Forest ownership

All natural forest land in Thailand is owned by the State. T and there is no legal access to these forests apart from by the authorities. All forest concessions were revoked in 1989 when the logging ban was introduced. The forests are out of bounds even for the local communities living adjacent to the forests. This has caused has causing wide controversy. Many local communities rely on forest resources, both wood and non-wood, for their living . Consequently but even small-scale utilisation, that takes place in any case, most often is illegal. Permissions for the utilisation of some produce, mainly from for non-timber forest products (NTFPs NTFP) have, nevertheless, been issued.

In addition to forest plantations there are notable areas of rubberwood plantations, particularly on the private lands in the southern part of the country.

3.2 Legal Framework

There are no legal arrangements for logging in natural forests. The logging ban is total. If there is any need for logging in the forests due to, e.g. change of land use pattern in dam sites, logging is carried out by the Forest Industry Organisation (FIO). This is, a parastatal plantation, logging and wood industry company. The natural forest species are classified into three categories:

1. teak
2. other reserved species, and
3. non-reserved species

Teak and other reserved species may under exceptional circumstances be harvested in marginal volumes while for non-reserved species a license is needed, though the process is less cumbersome. Additionally there are the confiscated logs that have become state property and are processed by the FIO.

As for plantation wood, on private plantations all wood can be harvested out a license. The plantation management only has to respect regulations concerning stamping and transport of logs. Like in other plantations, logging in exotic plantations [eucalyptus and rubber] needs no permission and is based on the management decisions by the plantation owners. There is no government interference in the harvesting decisions.

Planting of restricted species of private lands or plantations is subject to Forest Plantation Act B.E. 2535 (1992). Owners of plantations must register their undertakings, register wood stamps, and report harvesting schedules

All logging concessions ceased after the logging ban and currently only some minor charcoal producing mangrove concessions are still operational. Even their discontinuation in the near future is likely.

3.3 Domestic supply

Industrial Roundwood

After the logging ban was initiated harvesting volumes of domestic, legal natural forest roundwood have become marginal and the industry has needed to find other sources of supply mainly from plantations and abroad. Domestic logging was not, however, fully stopped as some marginal wood flows still originated even legally from Thai forests. This supply is, however, only a drop in the ocean of 3-4 mill. m³ non-rubberwood use of the forest industries in the country. Additionally there is notable wood flow from illegal sources, both domestic and abroad. (Table 3.1)

Table 3.1: Legal Natural Forest Logging 1985-1997

Source: Royal Forestry Department (1998)

Illegal Logging

There are wide spread allegations of illegal logging taking place in Thailand and the illegal forest utilisation may be classified into three categories:

1. encroachment by the growing rural population and shifting cultivation
2. upland rural people are being resettled in lowland areas, e.g. due to infrastructure development, protected area establishment, watershed protection. In order to maintain their traditional lifestyles they return to new virgin forest areas
3. commercial illegal logging. The wood is destined to go directly to sawmills or first smuggled to a neighbouring country from where it is "legally" imported to Thailand. This scam is naturally more common in well forested border areas with good infrastructure.

As is obvious, there is no exact data available on illegal logging. The Thai Forest Sector Master Plan (TFSMP) estimated that 62% of sawnwood production was based on illegal logs and that in total 3 mill. m³ of illegally cut logs was used [commercially ?] in the country. This data was collected in the early 1990’s which coincides with the adjustment process of logging. It may be assumed that the mills have since then closed down, switched to rubberwood or found raw material sources from abroad. Also the peak in logs confiscated in 1990 indicate the same, illegally cut volumes have somewhat declined – but by far, have not disappeared – as the industry has got used to the new situation.

Analysis of the wood demand in Thailand is incapacitated by lack of industrial production statistics. However, based on the available information on production capacity and its utilisation and legal supplies (domestic and reported imports) there remains a gap of 2.4-3.3 mill. m³ in the demand–supply-flow, while illegal imports have been estimated at 0.6 m³ (c.f. Chapter 0) share of illegal domestic supply remains 1.8-2.7 mill. m³, or on average or 25% of the total log supply including rubberwood or 56% of the non-rubberwood logs.

4. Forest Industries

4.1 Industry Structure and Ownership

Despite the obvious disadvantage of utterly limited domestic raw materials, Thailand has managed to develop a vibrant and diverse wood processing industry ranging from sawmills and wood products industry to a pulp and paper industry. Unlike in other GMS countries, most mills are privately owned. Only a few are under state ownership under the FIO.

Table 4.1: Number of Licensed Sawmills 1987-97

* sic!
Source: Office of Agricultural Economics (1998), Royal Forest Department (1998)

4.2 Production Volumes

No authority in Thailand collects production volume information for wood industries; in forest industries only production figures for the pulp and paper industry are made public.

The number of licensed sawmills in Thailand declined drastically in 1997 to 633 from 683 mills a year earlier. This may have been contributed to by fall of the Thai economy and the number of sawmills may be an overestimate as many of the sawmills are dormant due to quiet markets. The main demand for sawmill industry products originates from the construction sector. However, the permits for new buildings declined in 1995-97 by 43% and this left the sawmill industry in dire straits.

Sawmills in Thailand are relatively small. The TFSMP estimated the average annual production of sawmills to be 7000 m³ annually though during the current economic situation it is to be much lower. The sawmills that utilise rubberwood are generally smaller and the in TFSMP their annual production was estimated at below half of those of hardwoods and pine, i.e. 3100 m³/yr. The rubberwood sawmills are mainly located in the southern parts of the country where the plantations also are. However, in recent years the rubberwood processing capacity has both been modernised and expanded and the average capacity may be estimated at 4000 m³ p.a. whereas other sawmill industries have been more stagnant and the average capacity has remained the same.

Based on the rubberwood utilisation in sawmilling, the number of sawmills and their average capacity, it may be estimated that the medium term average in the Thai sawnwood production is 3.4 mill. m³ divided equally between rubberwood and hardwoods.

ITTO (1998) reports sawnwood and plywood production volumes ranging from 500 000-850 000 m³ in 1993-97. This would make the average annual production per sawmill questionably low: 700-1300 m³ , the upper limit during the peak years in the mid-1990’s. It is apparent that the volumes reported to the ITTO only include wood industry production based on legal wood supply; this is confirmed by the overly neat match between of reported log supply and demand (Log Tracking Index-values 98%-102%, see the Regional Report).

The lack of any industrial production data cripples the analysis of other wood industries even more severely than sawmilling. However, if import volumes are any indication of the size of the market, the handicap is not of a severe nature. The total import volume of plywood, veneer and veneered panels in 1997 was 71 000 m³, only 5% of the sawnwood imports. A respective share of the market would make the domestic production 155 000 m³.

4.3 Pulp and Paper Industry

Production volumes have increased tremendously and Thailand was for the first time in 1997 a net exporter of paper products, but continued as a net importer of market pulp. The switch was due to lower domestic demand as it was not coupled with a matching increase in supply. (Table 4.2)

Table 4.2: Pulp and Paper Production 1985-1997

Source: Royal Forestry Department (1998)

4.4 Environmental Management

For most wood-based industries, waste residue proportions are still high, especially in sawmilling and furniture industries. The pulp industry is more modern using advanced technology which makes use of almost all residues.

Sawmilling plants usually convert logs or rough sawnwood into lumber grades leaving large volumes of wood waste. The residues are nowadays bought for charcoal production or fed into steam boilers. However, very small residues have no use and pile up on the mill sites waiting to be taken away or disposed of. Studies on utilising wood residues in electricity production are ongoing. However, a recent one showed that it would not be feasible, but other ones are on-going.

European Commission (EC) and the Association of South-East Asian Nations (ASEAN) have established a the COGEN programme to accelerate the implementation of technologies for generating heat and/or power from wood and agro-industrial residues. The program is currently on-going has a total budget of over USD 100 million.

To keep up with international standards of wood products, some big pulp and paper enterprises acquired certificates for ISO 9001, 9002 and 14001. About half the furniture and wood products industries have received ISO 9000.

There is a national Green Label scheme for environmentally friendly products in Thailand, implemented by the Thailand Environment Institute (TEI) in association with the Ministry of Industry. The scheme has awarded certificates for paper products and is in the process of including rubberwood products within its orbit.

Certification of sustainable forest management is currently not relevant in Thai forestry. The logging ban makes the schemes unnecessary. There have been initiatives to analyse applicability of certification in plantation forestry.

5. Role of Forest Sector in the National Economy

Thailand has become economically the most prosperous of the GMS countries and its economic structure differs from that of the neighbouring countries; agriculture, forestry and related primary production contribute only 11% (1996) of the Gross Domestic Product (GDP) while in the other GMS countries the rates are in the range of 25-50%. The share of industry is 40%, manufacturing industry contributing 29%, while services have a high share of 50%. The share of forestry is minuscule, 1% of primary production and 0.1% of the total GDP. This, however, is an underestimate as it does not include the 1.8-2.7 mill. m³ assumed to be illegally logged annually. If the logs are valued at the average import log price in 1997 THB 6 067 (USD 193) the total gross value of production becomes THB 14 bill. This, combined with legal forestry, would make forestry share 4-5% of agriculture and 0.4% of total GDP.

Due to a lack of valuation information on rural household wood consumption the importance of forestry production in the Thai economy is constantly underestimated. Additionally, forest cover provides an enabling milieu for several activities, especially for agriculture and tourism to name a few. Thus the indirect contribution of forests in the national well being is not fully reflected in the GDP statistics.

In foreign trade forestry and the forest industry sector have slightly larger shares; logs and sawnwood imports constitute 1.3% of the total imports whereas for other wood industry products the share is 0.1% and pulp and paper products 1.3% making the total share 2.7%. As for exports the shares of total exports are 0.1% for logs and sawnwood, wood products (incl. wood chips) 0.8% and pulp and paper products 0.3%. The total share is only 1.3% of exports.

Also in the formal employment the role of forestry and wood processing is small. In total the forest sector officially employs 288 000 people, the main categories being general labourers in forestry and wood working industries. This is only 0.8% of the labour force. (Table 5.1)

Table 5.1: Forest Sector Employment 1999 est.

Source: Sompetch Mungkordin (1999)

6. International Wood Trade

6.1 Imports

The combination of curtailed domestic wood supply and expansion in wood processing capacity have meant an inevitable deficit in domestic demand–supply-balance. This has made Thailand a major importer of roundwood and semi-processed wood products from the GMS countries as well as from other countries in the region; mainly Malaysia. Log and sawnwood imports in 1995-97 by country of origin are presented in Table 6.1. Here, as in all the other export/import statistics, GMS data does not include Yunnan but it would have only small importance, and even the share of the whole China is only marginal. In analysing data from the GMS countries it needs to be noted that both Vietnam and Cambodia have log export bans, and Vietnam had even prohibited sawnwood exports as early as 1994. Therefore these imports to Thailand are based on special arrangements and/or have been exported illegally from the country of origin.

Table 6.1: Log and Sawnwood Imports 1995-97

Sawnw. = sawnwood
For additional information on Cambodia, see the Cambodia Country Report.
Source: Royal Forestry Department (1998)

The collapse of the Thai economy in 1997 and the emergence of the Asian Crisis is clearly demonstrated by the one third decrease in the sawnwood import volumes while the imports of logs declined much less, only 4%. Log demand in the country had already declined a year earlier. In 1997 imports from Malaysia decreased more than average both in log trade (-36%) and sawnwood (-41%), while log imports from GMS increased by 60% and sawnwood imports were affected by less than average (-19%) and the market share of the GMS countries increased particularly in log trade.

The official statistics do not, however, unveil the whole picture. There is large scale illegal imports of both logs and sawnwood from the neighbouring countries into Thailand. The most important wood flows originate from Cambodia, who in the past few years has not been able to have official control of any description in logging and wood trade. Total log imports from Cambodia were estimated in 1997 to be 0.5 mill. m³ and sawnwood imports 1.7 mill. m³. Thus the illegal imports from Cambodia would be 0.3 mill. m³ logs and 1.6 mill. m³ sawnwood. Part of the sawnwood imports are likely to be reported as originating from Laos, making the actual imports from Laos smaller than reported. There are also unrecorded imports from Myanmar and other countries. However, there is no information on the unrecorded imports from non-GMS countries, however but they may be estimated to be of moderate volume. (Table 6.2)

Table 6.2: Estimated Illegal Imports from GMS-countries

Thailand used to be a major importer of illegal Cambodian logs but has recently curtailed the flow, this has also eased the situation of legal operators when domestic demand declined after the emerge of the Asian Crisis.

In wood-based panels the market share of the GMS countries is lower and only Lao PDR has a permanent, though weakening, foothold in the Thai market. For other wood-based panels (particle and fibreboard) there were no imports from any of the GMS countries. (Table 6.3)

Veneer sheet and fibre and particleboard imports increased in 1997 despite the Crisis. These products are used in lower segment products, and are combined in veneered panels, a low value substitute to real plywood.

Table 6.3: Wood-Based Panel Imports 1996-97

Source: Royal Forestry Department (1998)

As may easily be assumed there have been no paper imports from the other GMS countries and for pulp a very small volume was imported from Myanmar in 1997. In both product categories the market share of the neighbouring GMS countries is 0%. This is obvious because in all the GMS countries, incl. Thailand, pulp and paper industries are destined for domestic markets and they are usually net importers. (Table 6.4)

Table 6.4: Pulp and Paper Imports 1996-97

Source: Royal Forestry Department (1998)

6.2 Exports

Compared to imports Thai forest sector exports are small and most exports are in the form of further processed wood products. There have been some sawnwood exports, though only marginal, and the country is a major net importer (Table 6.5).

Table 6.5: Log and Sawnwood Exports 1995-97

Source: Royal Forestry Department (1998)

Year 1997 saw a change in the pattern of paper and paperboard in Thailand. In that year the country became a net exporter. For the pulp needs the country has constantly been a net importer. (Table 6.6)

Table 6.6: Pulp and Paper Exports

Source: Royal Forestry Department (1998)

The main wood product segment in which Thailand has for a long time been a net exporter are woodchips for pulping. The fast growing pulpwood plantations have been able to produce volumes well beyond the needs of the country. (Table 6.7)

Table 6.7: Woodchips Trade 1993-97

Source: Royal Forestry Department (1998)

7. Demand–Supply-Balance

As far as domestic demand–supply-analysis is concerned, Thailand’s wood market is by far in imbalance; domestic supply is unable to satisfy domestic commercial demand due to the logging ban; this is in fact the case by definition. Local communities do not have legal access to the adjacent forests making also the domestic/household segment legally unbalanced. The structural demand–supply-balance may be analysed by comparing the demand with the supply potential in the forest areas that are not separately designated as protected areas.

There is no accurate information on the growth and production potential of the Thai forests. In other studies in the region a rough estimate of 1 m³/ha has widely been used and it is applicable also in Thai circumstances. The protected areas specially intended to protect forested nature – national parks, forest parks, botanical gardens and arboretums – cover 4.3 mill ha, i.e. 34% of the total forest area. This area is outside even theoretical forest production potential making the potential production forest area 8.45 mill. ha and the estimated growth respectively 8.45 mill. m³.

Both household and commercial demand prefer some species and wood dimensions and the whole growth does not contribute to the production potential or allowable cut; in assessing the commercially attractive yield it has been estimated that only ¼ of the growth could be utilised by the industry whereas for household demand the share would be notably higher, up to 80-90%. For more discussion on fuelwood demand–supply-analysis, see Box 1. Thus the supply potential from forests by market segment may be estimated at:

• commercial demand 2.1 mill. m³
• household/fuelwood 6.8-7.6 mill. m³

For household wood there is still another notable supply source in trees outside forests, this includes shrub- and woodlands, scattered trees in agricultural lands, agro-forestry systems, etc.

Household Fuelwood Demand

Fuelwood demand in Thailand is a rural phenomenon; the TFSMP (1993) estimated that 92% of wood-energy is used in the countryside, and 1% and 7% in Bangkok and other urban centres respectively. The basic pattern has not changed in the 1990’s, at least not towards a more urban consumption pattern. The same study found that fuelwood and charcoal had almost the same shares in the consumption, 53% and 47% respectively, the ratio being almost the same in rural areas.

In rural areas the per capita demand of woodfuel has been estimated at 0.6-0.7 m³/year, clearly below the TFSMP estimate of 0.75 m³/year. Another factor that has been easing the pressure on forest resources has been the urbanisation process; the role of woodfuel in the country as a whole has drastically declined.

At national level there should not be a fuelwood deficit. However, the actual situation in the field varies a great deal depending on the local wood resources per capita. In a survey in 1991 almost 40% of households nationally responded to have severe or moderate fuelwood shortages, simultaneously there was an estimated 5% fuelwood surplus in the country. In the north-eastern parts of the country 35% of respondents reported a shortage despite a 13% surplus, and even in southern parts more than 15% reported shortages despite a 27% surplus.

Commercial Logging

The Thai forests, despite the grim forest loss in recent decades, still could support some logging. It was estimated that the current illegal domestic supply would be in the range of 2.0-2.5 mill. m³; due to the estimated 30% logging waste the production of such a log volume would translate into removals of 2.9-3.6 mill. m³. Another 0.1 mill. m³ needs to be added for the legal removals.

The removals are above the estimated sustainable yield of potential production but this should not, however, be seen as a sign of severe unsustainability. The logging is illegal and hence does not differentiate between nature conservation areas and other forests and in terms of the whole forest estate in Thailand the commercially attractive supply potential is 3.1 mill. m³ much of which evidently is inaccessible and outside even theoretical potential.

In total the Thai forestry sector cannot meet its wood demand in a sustainable manner, even with the current level of imports. Compared to the total growth the over-removals are 7% whereas in relation to commercially attractive supply the situation is far more severe, the removals of almost three million cubic meters represent some 150% of utilisation capacity of the resource, and all this is illegal.

Figure 7.1: Demand–Supply-Balance, commercial utilisation

8. Conclusions and Recommendations

8.1 Current Situation

Thailand is a large wood industry country but a small forestry country. The country has become a showcase in the battle between economic growth and the nature, and it appears that economic activity currently has – despite the severe economic crisis – the upper hand.

Forestry in Thailand has few disagreeing characteristics; the sector faces constantly very active manifestations from a very large variety of NGOs and at the same time local communities are totally left out of forest management unlike in the other GMS countries; Thailand has had a logging ban for the past ten years and still forest loss is higher than in many countries with active commercial logging; and finally, Thailand is often characterised as a monolithic, top-down, highly controlled society and still there is vibrant informal/illegal logging sector. The country should not have any natural forest logging and yet still has developed a healthy wood processing industry. It appears that the Thai forest sector needs to reinvent itself and elaborate policies to match the changing realities.

8.2 Recommendations

Statistical Development

There is a need to increase collection and dissemination of forest resource, forestry operation and forest industry information and statistical data. Information is a powerful tool in managing and analysing the sector. Currently the Royal Forestry Department publishes a statistical yearbook but it contains mostly secondary foreign trade statistics and general statistics of the country; only little on forest resources and wood utilisation. There are also severe methodological errors; e.g., in trade and utilisation statistics roundwood and sawnwood are added straight in the totals without converting them to roundwood equivalents. In some tables, state activities represent the whole sector, private sector data are lacking or and it is not always disclosed.

Therefore, it is recommended that Thailand initiates a program to improve the collection of forestry data and its publishing; this process would include also a national level forest inventory, research on growth and classification of forests, and the economics and social aspects of forest utilisation. The latter research initiatives particularly need to be started soon as obtaining results takes a long period of time. For effective and transparent forest management and forest policy implementation it is essential that

1. forestry related statistical data are widely collected and made accessible in a consistent and coherent manner
2. the inadequate industrial production and foreign trade statistics should be developed, and the information should be collected and made public.

Development could go through a two-step process:

1. naming independent body/ies, e.g. a research institute or national statistical institute, responsible for such information services. Also the RFD could continue being in charge of the forest statistics. The institute would have the right to collect all relevant market and forest resource information in Thailand. They would also have access to all relevant information already collected in the country.
2. the institute[s] would publish the information in such a way that no information from a single market player would be disclosed.

All the countries in the GMS region need to strengthen their forest statistics systems and their development should be harmonised in the region. The initial stage would be to jointly agree upon the nomenclature, methodology of measurements and units of measurement. The harmonised level would form the minimum level, e.g. in eight-digit production and trade nomenclature harmonisation would reach six-digit level leaving two for national specifications.

In needs to be stressed that the data collection and actual statistical work would be a national responsibility but would be based on the jointly agreed standards. The regional co-operation would have three main benefits compared to entirely national processes: a) training and training material production could be partly jointly implemented, b) development costs per country would be lower, this particularly applies to expensive and time consuming computer software development, and c) common nomenclature enables further regional co-operation in analysing and monitoring wood flows.

Review of Forest Policy and the Current Status of TFSMP

Almost ten years has passed since the Thai Forest Sector Master Plan was prepared and many of its recommendations are still lacking implementation. The Thai authorities together with representatives from the various stakeholder groups in forestry – communities, environmental mass organisations, representative NGOs, forest industries and wood traders, etc. – should start a dialogue to assess the potential role of forestry in the country and could be one of the new challenges facing the sector in the new millennium.

This is particularly important as it has become evident that the main tool in Thai forest policy, the logging ban has been ineffective in curtailing forest loss. By banning all logging the authorities have given away the right to direct forest utilisation towards a more desirable structure, implementing a logging ban without curtailing demand is an uphill battle with little chance of success. The future and feasibility of the logging ban should be studied and compared against an option of more flexible approach to effective forest management and monitoring; this would concentrate on protecting fragile watersheds and ecosystems while opening the less fragile areas to utilisation through community forestry initiatives.

Community Forestry/Joint Management of Natural Forests

Thai legislation does not provide the local communities with rights in the adjacent forests. This, combined with high demand for agricultural land, has led to uncontrolled encroachment and loss of forests. Were the communities and their members given legal access and, even better, partial decision making and revenue in the forests they would incorporate forests in their income/investment portfolios rather than seeing it purely as "vacant" land for agricultural expansion.

The options for community participation and ownership are studied in more detail in the RETA 5771 policy and institutions analysis (Puustjärvi, 1999).

Illegal Supply

Illegal sources provide a bulk of wood consumed by the wood industries in the country. The supplies come both from domestic forests and abroad. Particularly in the western border areas there are allegations of illegally cut Thai logs being transported to Myanmar and labelled as Myanmar wood and then imported back to Thailand carrying the necessary documentation. This would have been widespread until 1993 when some Thai companies had large concessions across the border in Myanmar.

These two types of illegal supply require slightly different interventions.

domestic

Control during the whole chain-of-custody should be reinforced; pure forest based operations are required but not adequate. Currently there is little chance of controlling the whole forest estate effectively. Involving local communities in the management through joint management arrangements would not only increase income other than from illegal logging wages but also increase the sense of ownership in the resource among the rural populace and thus introduce self interest in protecting the forest.

Currently all sawmills require a license from the RFD and compulsory registration should be introduced also to all wood traders – both by roundwood and sawnwood retailers. Wood processing mills are to be required to keep thorough records of all production and raw material use and sources of