Presentation material from Finpro Market Opportunity Day, May 17 2013.

1. Market Opportunity day 17.5.2013
Asia & Sub-Saharan Forestry
Finpro / Jussi Havia Seppo Keränen,
Esa Rantanen, East Africa
Heta Pyhälahti, Southern Africa

2. Global Forestry Signals
“Where will China get its logs and lumber after mid-decade…Both US
and China will need to import increasing volumes of lumber and logs
that will be tied more and more to international market forces as global
timber and lumber supplies tighten.”
-Russell Taylor, President of International WOOD Markets Group Inc.
“An African commodities boom is in full swing, stimulated greatly by
Chinese market demand and growing Chinese investment in Africa’s
forests and timber. In Mozambique, for example, it is estimated that
some 90% of timber exported is destined for China, and all of this is
produced and bought by small enterprises”
-James Mayers, International Institute for environment and development
21/05/2013 2© Finpro

3. Forestry Signals from Africa and Asia
21/05/2013 3© Finpro
Awareness of the forest’s
value has been growing.
First Finnish log-houses have
been delivered to Kenya.
In Sub-Saharan Africa new pulp
& paper mills will be built In
medium term. Effects on wood
harvesting.
High end housing
expands the market.
Demand for low tech wood processing equipment serving governments’ job creation
schemes.
Demand for high class
furniture and interior materials.
Finland has funded in last years many
forestry projects and also some saw mills
have been delivered.
Wood processing is
getting closer to the raw
material stocks and the
end customer.
Plantation size and steady supply
need of raw material, drives the
use of mechanized harvesting
methods.
Certification requirements drive the
use of plantation timber replacing
gradually natural forest tropical timber.
Housing
starts will
expand the
market.

4. Global Opportunity Drivers
• After a “cooling-off” period in 2012, China’s
requirement to feed its growing wood deficit
will see a return to steady demand growth for
imported logs and lumber
• Canada’s lumber production will plateau by
about 2015, allowing no increases in exports
to the U.S. and will, therefore, see its’ U.S.
lumber import market share plummet to two-
thirds of its historical level.
• A stronger U.S. market demand is predicted
and this is expected to push imported
Chinese log and lumber prices higher
• The housing starts in Japan for 2012 were
better than had been anticipated and also
marked the third straight year of growth after
the market began to recover
21/05/2013 4© Finpro
Imports of sawnwood 1000 USD
0
1000000
2000000
3000000
4000000
5000000
6000000
7000000
8000000
9000000
200620072008200920102011
China
Japan
Republic of
Korea
India
United States of
America

5. Opportunity Drivers in Africa
• Markets in Sub-Saharan African
countries like Mozambique, Tanzania,
Uganda and Zambia are following Kenya,
and shifting from aid-driven to market-
driven business.
• China’s relationship with Africa is
deepening. It has become Africa’s
biggest trading partner
• East African timber trade is set to
expand, largely driven by growing
regional and international demand.
• The economies and population are
growing rapidly: housing need and
middle class demand for high quality
interior products.
• New technologies and competences are
urgently required to utilize the natural
resources the most optimal but also
sustainable way.
21/05/2013 5© Finpro
0
20000
40000
60000
80000
100000
120000
140000
2006 2007 2008 2009 2010 2011
Mozambique
United Republic of
Tanzania
Zambia
Kenya
Exports of Forest Products 1000 USD

6. Opportunity Drivers in Asia
• China has a massive fibre deficit
that is expected to continue to grow
– more imports of logs,lumber and
other products will be required to fill
the widening gap.
• Changes to the Russian log export
tax that continues to leave Russian
log exports less available and
expensive for Asian markets
• In Japan the major push continues
to be the planned rise in the
consumption tax in 2014, but
favourable sentiment is now also
being driven by the new Prime
Minister’s economic policies
• Developing economies in Asia are
answering to ever greater exports
and domestic demand of forest
products with a massive increases
of their production
21/05/2013 6© Finpro
Exports of Forest Products 1000 USD
0
500000
1000000
1500000
2000000
2500000
3000000
2006 2007 2008 2009 2010 2011
Viet Nam
Myanmar
Lao People's
Democratic
Republic
Thailand
Australia

7. Why Sub-Sahara and Asia
21/05/2013 © Finpro 7
• The bulk of African forests occur in
Sub-Saharan area. Estimated total
forest cover is 674 million hectares,
accounting for 23% of the continent’s
land area.*
• Finnish forestry know-how is very
well known among the governments’
decision makers.
• Finpro has a strong presence and
network covering the target markets.
• Scaling business benefits due to
regional integration.
Kenya
Mozambique
Tanzania
Uganda
Zambia
*Source: Chidumayo, 2004

8. Why Asia and Sub-Sahara
21/05/2013 © Finpro 8
• Finpro has a strong presence
and network at the market:
‘We understand local business
and ways of working. Through
our connections we are able to
help you establish important
trade relations and sign
business contracts.’

9. Identified Customer Needs in the Mechanical
Wood Processing Value Network
• Forest management and R&D
• Tractor mounted harvesting equipment for farmers
• Forest plantation, seed multiplication, nursery and
research
• Harvesting technologies, machinery and logistics
solutions for plantations
• Wood products for housing, construction and
interiors
• ICT solutions e.g. improving collection and
dissemination of forest data including real-time fire
alerts, game density mapping, verification for legal
timber operations and tracking systems
21/05/2013 9© Finpro
Plantations
Contractors
Private sector (including
farmers)
Pulp mills
Plywood manufacturers
Government
Local authorities

10. Opportunities in SEA and in India
• Economic role of forests has been noticed in countries such as
Laos, Cambodia, Myanmar, Vietnam, Philippines and Thailand.
– Private, small scale trial plantations are widely spread.
– Vietnam is now exporting secondary products as bone dry chips
overtaking Indonesia.
– Myanmar has the largest untapped forestry resources in Asia.
• India is a major importer of wood and plywood material.
– Also need for technology and machinery e.g. packaging lines for
the pulp and paper industry.
dd/MM/YYYY 10© Finpro

11. Opportunities in Indonesia and Malaysia
Its time to activate contacts and introduce new equipment to the market:
• In Sumatra, Malaysia and in Kalimantan, Indonesia P&P mills require
input of 10 000 m3 of wood per day. This is the main driver to engage
modern harvesting methods and equipment.
– Plans for a new pulp mill in Sarawak. Currently there is a shortage of raw
material but plantations start to mature in 2- 4 years. This will have effect on
wood harvesting.
– New plantations also in Sumatra and Malaccus islands and Middle
Kalimantan.
• In both countries trial harvesting has started in new sites.
• Continuous business opportunity to cover existing, large plantation
renewal and improvement of the whole harvesting process.
• Need for tractor mounted equipment for farmers and small growers in
Java where plywood industry supply chain mills are buying material from
adjoining plantations.
dd/MM/YYYY 11© Finpro

12. Kenya and Tanzania: Market for Sustainable
Forest Management
• Kenya is in the process of recovering its forests with strict
conservation measures.
– Business opportunities arise with sustainable forest
management know-how.
• In Kenya 60 % of forests are privately owned
– Currently, Kenyan forests are used as tea plantations and
by communities (mainly for fuel wood collection)
• In Tanzanian forests are covering 41 % of the total land area.
– Forests are an important economic sector: contribution to
GDP has grown from 2.6% to 4.6 % (2011).
– The sector employs 3 million Tanzanians through forest
industries, forest plantations, government forest
administration and self-employment in forest-related
activities.
21/05/2013 12© Finpro

13. Mozambique: Forest investments and forest
industry
• Various international investors and forest companies have
shown interest in plantations
– Nine different investors have requested a total area of 887 800
ha for plantations, mostly in Niassa Province
– Companies involved include: UPM, Portucel, Suzano
– Currently 65 000 ha planted
• Private forest companies can apply for concessions to use
indigenous forest resources
– Currently there are 165 approved concessions out of which 81
have development plans
– These concessions cover a land area of over 6 million hectares
– There are not many requirements to get a concession and the
concession holders do not usually understand much about forest
management but only want a quick sell to the Chinese
– A lot of wood is exported illegally, especially to China
21/05/2013 13© Finpro

14. Identified Customer needs
• Sawmill technologies, including services: operating and training
• Wood products for construction: electricity poles, plywood
• Wooden buildings: high end
• Wood products for interior: furniture, flooring, decoration
• Wood products for exterior: Thermo wood (treatment)
• Verification for legal timber operations: tracking systems and
technologies
21/05/2013 14© Finpro

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