Ministry of Natural Resources and Environmental ...With the big changes in the Myanmar Timber...

Ministry of Natural Resources and Environmental Conservation

Myanma Timber Enterprise

Current MTE/U Tyn Oo (DGM (P)(EXPORT) (Updated August, 2017)

1

Current situation of Myanma Timber Enterprise and the

future plans & documentation for Myanmar Timber export Dear Valued customers and timber importers,

We, Myanma Timber Enterprise, bring the warm greetings and best wishes for

the success of the Year. It is our greatest pleasure and privilege to explain the

current situation of Myanma Timber Enterprise and the future documentation

for Myanmar Timber export to you all. The purpose of the information booklet

is to describe about the future documentation of Myanmar Timber export to

buyer’s countries and the effect of non-tariff trade barriers including legality

of timber and thoroughly trace back system of timber harvesting in Myanmar.

Dear Valued customers and timber importers,

Firstly, we would like to explain briefly about the current situation of

Myanmar Timber Sale and Export.

After Myanmar’s new government came to power, Myanmar’s political,

economic, and social transformation, and reform and development have made

great achievements. In the past five years of transition, Myanmar has

introduced a series of new policies in internal reform and opening up to the

outside world, which was well received both among the Myanmar people and

the international community.

In accordance with the State-owned Economic Enterprise Law of Myanmar, in

which prescribed that “the Government has the sole right to carry out the

extraction of timber and sale of the same in the country and abroad ”,

Myanma Timber Enterprise is solely responsible for timber harvesting &

marketing. Thus it is obvious that processing and marketing of the timbers

extracted by MTE is the concern as the main source of Myanmar timber trade.

MTE, as a State Economic Enterprise, is fulfilling its duties – to meet domestic

consumption of timber products and to earn foreign exchange earnings.

With the focus of the new policy, the log export ban policy, which is practiced

in 2014, aims at encouraging domestic small and medium sized wood-based

industries to increase export and production of higher-earning finished

products through increased investment from private sectors domestically and

internationally.


2


In line with the New Government’s reform strategy, the Ministry alters the

policy of timber extraction, processing and manufacturing of timber products

with the intentions to make efforts on environmental conservation, timber

trade & State economy, development of wood-based industries sector and

investment sector, and sufficient supply to Local Industries. Recently MTE

halt the harvesting timber for one year of 2016-17 in the whole country, and

for 10 years in Pego Yoma Region from 2017 to 2027.This is a big change of

timber harvesting in Myanmar.

Under the reform process, the timber extraction is scheduled to begin with the

volume within the AAC limit in 2017-18 fiscal year. We have a plan to harvest

the timber; Teak 15000 H.T and other hardwood 350000 H.T during the 2017-

18 fiscal year. Timber Harvesting (2017-2018 Extraction Year) will be done by

MTE’s own strength without any sub-contractors. Due to its own limited

assets & resources, the MTE will practice the service providers which can hire

and provide the machineries, elephants & transportation carriers of domestic

private services for the five kinds of services; felling, stumping, road

construction, trucking & loading and unloading. For these services, MTE shall

not allocate the quota of timber in kind but in cash. At the same time, the next

export ban for products obtained from the raw material purchased in local

currency is already introduced on March 2017. This export ban (2016) will

increase the timber supply to local consumption.

Meanwhile, due to the facts of inefficiencies of some SOE factories,

introduction of privatization and promotion of the National Export Strategy

with SME sector, MTE is planning the implementation of its Institutional

reform process. As the Institutional Reform, with the approval of Government,

MTE will firstly be transformed as a State-owned corporation so that it will be

managed under Corporate Governance i.e.; owned by the State but managed

as a private company. In other words, it is the halfway to privatization.

Moreover, with the some changes in marketing & trading, MTE stopped the

Direct Contract Sale System to all direct purchasing proposals. At the time of

being, MTE transparently held the monthly Tender Sales only with the

stockpiles of timber to all timber businesses before the next harvesting of 2017.


3


On the other hand the Ministry has made great effort in the facilitation of

exporting timber products & importing timber from abroad by rearranging

the taxation system including income tax, commercial tax and customs duty.

According to the Union Tax Law 2017, exporters enjoy with the current levied

taxes and can promote the timber products export.

And then the Ministry participates in National Export Strategy, which was

spearheaded by the Ministry of Commerce with the technical assistance of ICT

and financial support from Germany’s Federal Ministry for Economic

Cooperation and Development (BMZ) and implementation support of the

German Agency for International Cooperation (GIZ). The NES is a five-year

roadmap of the needs and priorities for Myanmar’s sustainable development

through trade. In accord with the NES, as one of the most effective export

sector of the priority sectors, promotion of Myanmar Timber Products Export

is based on the sustainable export-led growth.

Moreover, the Ministry started cooperation with EU, European Forest Institute

– EFI, European Timber Trade Federation – ETTF to deal with EU Timber

Regulation – EUTR and Forest Law Enforcement, Governance and Trade –

FLEGT, and necessary measures are being undertaken to comply with ASEAN

& EU timber legality. Myanmar Timber Certification Committee formed in

1998 has been reformed into Myanmar Forest Certification Committee as a

semi government body in 2013 and is making efforts to develop Myanmar

Timber Legality System.

With the big changes in the Myanmar Timber Enterprise, it is sure that now

you will see the big picture of Myanmar Timber Trade.


On November 2016,Myanmar faced with the situation, which Swedish

Administrative Courts confirmed a ruling that a certificate issued, by the

Myanmar Forest Products Merchants’ Federation (MFPMF) did not provide

adequate proof that a shipment of teak imported into Sweden, had been

legally harvested.

Buyers of Myanmar timber products often use what is commonly known as

“the Green Folder” to demonstrate that their purchases comply with

Myanmar’s forest laws. The folder compiled by MFPMF typically includes


4

permits issued by the Myanmar Timber Enterprise (MTE), the sole official

seller of Myanmar logs, together with other official documentation from other

departments & organizations. It is clear that this green folder recommendation

does not covered the whole picture of Timber legality System in Myanmar

because it is just the collection of some documents from relevant departments

in timber business. This green folder cannot represent to the State Enterprise

but support the lack of some information about the timber products export

before the implementation process of MTLAS & FLEGT-VPA in Myanmar. At

the same time, the Ministry notices that it is necessary to upgrade the certified

documents along the timber supply chain of MTE.

Moreover, the Ministry understands that as the Swedish court case indicates,

if Myanmar wants to maintain access to European wood markets, these

reforms must also include supply chain transparency. European buyers have

access to the credible evidence necessary to demonstrate compliance with the

EUTR. While Myanmar Forest Certification Committee (MFCC), a

government-linked body, is currently developing a system to demonstrate

that Myanmar’s timber exports are legal, above-mentioned cases make us to

be busy with the continuous explanations to all customers.

Here we would like to clarify that although it is not sure to be legal for all

timber imported to EU under the name of Myanmar origin, we guarantee that

the timber sold by MTE to all customers are legally harvested, legally

transported and sold transparently to the timber markets.

We have already learnt that “If Myanmar wants to export timber to the EU, we

must abide by VPA procedures which can lead to a successful bilateral trade

agreement. As a result of MTLAS system & FLEGT-VPA scheme, a strong and

secure forestry management control can be established, while giving a boost to

legal trades of timber. Becoming a VPA member country of the EU-FLEGT is

not an easy process. We, as the government, needs to prove to the European

Union that timber production & marketing is legal, as well as provide open

access for CSOs and third party organizations to check whether timber

products have been legally harvested and that the process is not violating the

human rights of the local population.


5


The Ministry has already issued the Press Release concerning with the legal

right to harvest the timbers, transported legally and sold transparently to

international markets. Nevertheless MTE considers reforming the legal

documentation system for all kinds of timber sales systematically. MTE is

working on improving data systems so that information on traceability

becomes more readily accessible. After Myanmar’s current logging

moratorium, all timber extraction in 2017-18 fiscal year will be the sole

responsibility of MTE, so there will no longer be any question over who has

the right to harvest and who is responsible in timber supply chain. In the

meantime, MFCC, with the support of FAO and the EU, is working on

improving current verification systems with the aim of providing clearer

evidence that our timber exports are legal. Within these days of

implementation the MTLAS system & FLEGT-VPA process, MTE will provide

the necessary documents concerning with the detailed sources of all MTE

timber harvested and sold legally to the markets.

As the result, in coming years MTE is ready to issue the complete dossiers

concerning with the timber purchased from MTE. These dossiers include all

relevant information about each log of the parcel in line with the Form S-18 of

Forest Department and Form-D of MTE’s Extraction Department. These

certificates of conformity add an important check to the chain of custody of

Extraction department and will accompany with the product specifications

prepared by the MTE’s Export department. These documents can be learnt in

attachments.

While the MTE, on the side of State Sector, issues the dossiers for the

Harvesting & Purchasing Confirmation, Private Sector may build a book or

folder in the substitution of the so-called Green Folder, which is mainly focus

on export side with Due Diligence System. In this book, there may be some

documents such as UMFCCI’s recommendation, MFPMF’s recommendation,

Export license, Export permit, Export Declaration, Customs Documents,

Shipping Documents and so on. By checking the data mentioned in the

departmental recommended documents, the buyers could check & trace back

the legality of timber, which is directly purchased from the MTE or through

other buyers. Moreover everyone can trace back about the purchased cargoes


6

from which Extraction Agency it is harvested, with which ways the log is

transported from Depots to distribution points, with which system of sale it is

purchased, with which control system it is produced and how these cargoes

are shipped & exported. In this way, any independent monitoring

organization or any party which would like to know where the timber sold by

MTE come from, with the aforementioned information in the product

specification, can trace the timber to its origin forest & tree.

We are confident that we will be able to support integrated dossier about our

MTE timber in conformity with your guidelines before the emergence of

MTLAS & FLEGT-VPA program. At the same time I have a desire to inform

the situation to the relevant competent authorities and all other actors in EU

countries.


Nevertheless we have to still harvest limited amount of timber to provide the

necessary markets. We have a plan to harvest the timber; Teak 15000 HT and

other hardwood 350000 HT during the 2017-18 fiscal year. All harvested

timber will be providing for local use and local wood industries

proportionally.

We have a targeted plan to accomplish our timber business for year 2017-18 as

follow;

(a) Union Total

AAC;

According to the Sustainable Forest Management

Plan, Annual Allowable Cut (AAC) of FD are Teak

(19210) trees for (23052) HT and Hardwood (592330)

trees for (829262) HT.

(b) Moratorium of

10 Years harvesting;

Although the AAC in Pago Yoma region is Teak

(2260) trees and Hardwood (45770) trees, MTE halt

the ten years harvesting in this area.

(c) Optional regions

for Harvesting;

The AAC in Mon, Kayin and Kayar regions are Teak

(1580) trees and Hardwood (97180) trees, MTE

shall not harvest in these areas during this year in

course of the lack of security & profitability.


7

(d) Target of Teak

Harvesting;

To meet the operating ratio of the whole MTE, MTE

will harvest Teak (10620) trees for (15000) HT. This

will be 55% of the AAC for Teak trees.

(e) Target of

Hardwood

Harvesting;

To meet the operating ratio of the whole MTE, MTE

will harvest other Hardwood species (193412) trees

for (350000) HT, which is 33% of the AAC for

Hardwood trees.

(f) Harvesting

Practices

FD (District Level) and MTE (Agency level) agreed

to exercise transparently the Annual Contract

System for timber harvesting. Harvesting will be

done by MTE’s own strength without any sub-

contractors. But due to its own limited assets &

resources, the MTE will practice the service

providers which can hire and provide the

machineries, elephants & transportation carriers of

domestic private services for the five kinds of

services; felling, stumping, road construction,

trucking & loading and unloading. For these

services, MTE shall not allocate the quota of timber

in kind but in cash.

(g) Plan for Teak

Sales & allocation;

Teak allocation will be 7000 HT for Tender Sales

(Foreign currency), 5000 HT for SOE Sawmills’ raw

(transfer) and 3000 HT for SOE WBI’s raw

(transfer).

(h) Plan for

Hardwood Sales &

allocation;

Hardwood allocation will be 150000 HT for Tender

Sales (Foreign currency), 112100 HT for Local

Tender Sales (Local currency), 4000 HT for SOE’s

sawmills & wood industries as the raw timber

(Departmental transfer), and 48000 HT for Domestic

consumption (Departmental transfer).


8


In line with the above-targeted plans, there will be some changes of MTE for

the legality of timber in chain of custody process.

(a) For Logs which would be extracted in 2017-18 and forward!

1. There will be some changes in Hammer marking System on the Logs

and FD & MTE would stamp the necessary hammer marks on logs in

order to avoid complexity and easily trace back along the supply chain.

2. Logs of same harvesting area would be piled to one lot in order to

clarify the source of timber origin.

3. MTE would revise the Documentation in order to link sequentially

among FD + MTE (Extraction)+ MTE (Sale)

- Linkage between departmental documents (Form D + S-18 +

Form AU + Log Spec + DO)

- Revising AU form (Log Specification attached for transportation

from Depot (Extraction) to Yangon (Sale Depot)

- Revising Log Specification for each LOT, this is attached to

respective Delivery Order-DO [STANDING TREE NUNBER,

REVENUE NUMBER & MARKS and MTE’S REMOVAL PASS

(Transportation Document such as Burge/Truck Notes) will be

mentioned.]

4. MTE would upgrade the statistic control system for timber harvesting,

transportation, distribution and marketing along the supply chain from

Manual registration to Computerized System.

(b) For the Stockpile timbers & sold timber parcels

1. For the Stockpile timbers & sold timber parcels, as the solution of the

sources of these timbers, MTE would issue the Certified Letter for

Timber Harvesting & transportation in the supply chain, and the

Purchase Confirmation Letter for the sold parcels of previous years.

It is obvious that these changes will reconcile the future documentation

system of MTE smoothly. Likewise MTE have already declared the following

announcement to be issued the future documentation system for the

traceability of legal timbers sold out in Foreign Currency.


9

Ministry Of Natural Resources And Environmental Conservation

Myanma Timber Enterprise

Announcement to be issued the sale documents for the traceability of legal

timbers sold out in Foreign Currency

Accordingly MTE legally extracts the Timber from the State Forests, and

Export Department on behalf of MTE sells the raw logs in Foreign Currency to

the foreign & local entrepreneurs, it is to inform that the Department will

transparently issue to the buyer mentioned in the sale contract, the legal sale

documents with which all respective organizations can trace back the legality

of timber sold out in Foreign Currency as follow;

(a) For the timbers sold out before 2014-15 fiscal year (whichever

years of extraction)

In accord with the buyer’s proposal, the Department will

only issue the Purchase Confirmation Letter for above

timbers by scrutinizing the previous sale documents.

(b) For the timbers sold out within 2015-16 & 2016-17 fiscal year

(whichever years of extraction)

(1) The Department will issue the supplement of specification

for the above timbers by mentioning the Revenue Number

for each log in the concerning specification.

(1) In accord with the buyer’s proposal, the Department will

only issue the Purchase Confirmation Letter for above

timbers by scrutinizing the previous sale documents.

(2) Certified letter for the logs extracted and sold in 2015-2016

will be issued by the Extraction Department. There will

express that these logs were extracted and transported

according to the rules and regulations.

(c) For the stock of timbers which will sell within 2017-18 fiscal year

(whichever years of extraction)

(1) The Department will issue the supplement of specification

for the above timbers by mentioning the Revenue Number

for each log in the concerning specification.


10

(2) After the overall payment for purchased timbers, the

Department will issue the entire sale documents for each

parcel altogether in one time for one purchase only as follow;

Purchase Confirmation Letter

Specification

Sale Contract

Invoice

Delivery Order

Letter of Parcel Issue

Buyer’s letter for Parcel Acceptance

(d) For the new felling timbers of 2017-18 fiscal year

(1) The Department will prepare and sell the area-wise parcels.

(2) The Department will issue the specification for each parcel of

the above timbers by mentioning specific facts about the timber

extraction & transfers such as Removal Pass Number & Date,

Standing Tree Number, Revenue Number & Marks, Name of

Extraction Agency, Extracted Year and so on;

(3) After the overall payment for purchased timbers, the

Department will issue the entire sale documents for each parcel

altogether in one time for one purchase only as follow;

Purchase Confirmation Letter

Specification

Sale Contract

Invoice

Delivery Order

Letter of Parcel Issue

Buyer’s letter for Parcel Acceptance

(4) Starting from 2017-2018 fiscal year, the removal pass of log

transportation called Form AU will be issued by the Extraction

Department, in which agency classification mark, extraction

year, revenue mark will be described in addition to original AU

form to be able to link with log specification included in

Delivery Order of Export Marketing and Milling Department.


11

(5) Starting from 2017-2018 fiscal year, log registration will be

recorded by using excel format instead of manual.

(6) Moreover, the harvesting & transportation documentations

concerning with the sold timber extracted in 2017-2018 fiscal

year shall be issued as follow;

Stumping and Trucking Order

Log Transfer Order

Lot Confirmation Letter (for ex-site parcel)

Lot Delivery Permit (for ex-site parcel)


For the issue of 2017-18 harvesting year, MTE will provide the necessary

documents for the source of the timber sold by all tender sales. For the timber

harvested in this year & sold by MTE there will be some notifications about

the dossier concerning with the purchased timber.

(a) The Dossiers regarding with the purchased timber from MTE

Tenders will be only issued to the First buyer who firstly contracts

with MTE for the purchase. If some importers who want to get the

information about source of timber will have to claim these dossiers

to their exporter who may first buyer or sub buyer. It is meant that

MTE issues the original sale documents in only one time for the one

purchase to the first buyer only in order to identify with the relevant

timber in the whole supply chain.

(c) For the timber harvested in 2017-18 extraction year,

(1) The First Dossier is included with (8) documents regarding with

the sale information of Export Department of MTE and,

(2) The second one is included with (5) documents regarding with

sources of harvesting & transporting issues of Extraction

Department of MTE.


12

(d)Dossier for Sales confirmation to be issued by EMMD

1. Dossier cover


13

2. Lot Specification (EMMD-1)


14


15

3. Sale Contract (EMMD-2)


16


17

4. Invoice (EMMD-3)


18

5. Delivery Order (EMMD-4)


19

6. Advanced Information for parcel transfer (EMMD-5)


20

7. Reference for parcel transfer (EMMD-6)


21

8. Purchase Confirmation Letter (EMMD-7)(if necessary)


22

(e) Dossier for source of harvesting & transportation to be

issued by Extraction Department

1. Certified Letter for harvesting information


23

2. Stumping & Trucking Order


24

3. Log Delivery Permit (for Ex-site parcel)


25


26

4. Lot Confirmation Order (for Ex-site)


27

5. Log Transfer Order (for Ex-site)


28


This booklet is compiled with details of the MTE’s functions in 2017-18 and with the

intention to explain on helping its readers understand the yearly plans & supply chain

of timber harvested legally & sold transparently by MTE. We hope it will be useful for

any organization interested in purchasing Myanmar timber and trading to

international markets. We are convinced that we will be able to achieve our desired

outcome at the year 2017-18 and MTE makes the endless efforts to hold the targeted

market successfully.

As conclusion, while we admit that we have many issues that have affected our

supply chain process, we have implemented many measures to assure that legality of

our timber business will be transparency. We work hard on moving forward with our

standing in a positive manner.

Thank you very much for your time and consideration of this information. If you have

any information, please feel free to learn more at www.myanmatimber.com.mm.

Very respectfully,

MYANMA TIMBER ENTERPRISE

MINISTRY OF NATURAL RESOURCES AND ENVIRONMENTAL CONSERVATION.


29

We MTE, share the detailed messages about the current situation of MTE

(2017) and future plan & documentation for Myanmar Timber Export.

We do hope these information provided in this messages will be useful

for you.

Ministry of Natural Resources and Environmental ...With the big changes in the Myanmar Timber...

Documents

Transcript of Ministry of Natural Resources and Environmental ...With the big changes in the Myanmar Timber...