Furniture Industry Tables Tax Breaks to Boost Exports

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Tax incentives and reformed timber laws could rescue Myanmar’s neglected furniture industry and help it become a regional powerhouse, say forestry industry sources. At a December 1 meeting with Vice President U Myint Swe, they called for government support in ending and reversing what they called a 25-year decline in furniture manufacturing.

U Kyaw Kyaw Win, vice president of Myanmar Forest Products Merchants Federation called for changes in the way raw materials were distributed to the industry by the Myanmar Timber Enterprise, as a way toward increasing product value.

Claiming the industry was falling behind its competitors after a quarter-century of neglect, he said more mature solid wood should be made available. “In 2015, we earned only US$11 million from furniture exports, while Thailand exported more than $1 billion, Indonesia exported $1.8 billion, Malaysia $2.5 billion, Vietnam $6.9 billion and China $98 billion.

Manufacturers were calling for lower prices on the solid wood distributed by the MTE and tax incentives for importing the raw materials used to make furniture. “MTE distributes wood mostly in tender log form, which local companies can’t afford. We have to rely on the illegal solid wood, which is still too expensive,” U Kyaw Kyaw Win told The Myanmar Times.

Local furniture was mostly manufactured in Thailand and China, as most of the wood-based industries had shut down over recent years, he added.

“In 2006 there were about 30 factories, but now there only three left owned by local businessmen. We have to pay 15 percent customs duty, 5pc commercial tax and 2pc income tax. If the government can arrange to distribute cheap solid wood to local manufacturers and make it value-added, the furniture sector could become a jackpot for foreign income, like our regional competitors. That will bring in more tax revenue,” he said.

U Nyan Win, owner of Shwe Hmi manufacturing, agreed the main problem was a lack of legal wood.

“As MTE is only selling logs and solid wood together in a tender system where the local businessmen can’t compete with the timber merchants we have to rely on the illegal timer,” he said. “Illegal wood means that we have no documentation and it becomes illegal timber.”

This in turns makes it difficult for manufacturers to ship their product to different states, regions and countries. Strict regulations on legal timber mean any shipments without the right documentation can be seized.

Local furniture manufacturers are rare because of the strict export market regulations, said U Nyan Win. Additional challenges include skilled labour and land costs for setting up factories in industrial zones, he added.

“We want MTE, which we think has many suitable wood sources to hand, to distribute to the local wood based industry,” he said.

 

Source: The Myanmar Times

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