COVID-19 takes a heavy toll on Myanmar’s wood-based micro and small businesses

The COVID-19 pandemic is exacting a devastating toll on wood-based micro, small and medium enterprises (MSMEs).

Furniture workshop’s owner in Thaketa Township, Myanmar. Source: Agus Djailani, EU FLEGT Facility

MSMEs are the backbone of Myanmar’s economy. They constitute 99% of formally registered enterprises, and generate significant livelihood and employment opportunities. But the pandemic has had severe impacts on customer demand, revenue, finances, workers and the availability and distribution of raw materials. Myanmar’s MSMEs also face difficulties accessing support from COVID-19 relief programmes.

These are the findings of a survey of some 200 MSMEs conducted by the European Forest Institute (EFI) and the Sagawa Institute of Organization Development. Members of the Myanmar Arts and Craft Association and the Wood-Based Furniture Association were surveyed as part of EFI’s Sida-funded work in support of forest- and timber-based MSMEs in the Mekong region.

The MSMEs were surveyed nationwide in August 2020, most of these micro and small businesses. The survey found that COVID-19 had forced most enterprises to stop or permanently close their business. A staggering 33.6% of respondents closed their operations permanently due to the crisis, while 65.2% stopped them temporarily.

As a way forward, an EFI briefing recommends that industry associations collaborate with the Government to ease the challenges that MSMEs face in distributing products and purchasing raw materials from official sources. The associations should also assist their members by providing documents and sharing information to help them access short- and long-term financial loans. Finally, associations have an important role to play in supporting business registration and licensing of informal enterprises to enable them to access COVID-19 relief programmes.

Read the briefing: COVID-19 impacts on wood-based MSMEs in Myanmar

Author: Info

EU rules on illegal logging and deforestation impact of EU market products: Have your say

The European Commission has launched public consultations on the functioning of the EU Timber Regulation and the FLEGT Regulation, and the deforestation impact of products placed on the EU market.

Two key EU regulations to fight illegal logging, the Forest law enforcement, governance and trade regulation (FLEGT) and the EU timber regulation (EUTR), will be evaluated. According to the Commission, the EUTR and FLEGT Regulation “fitness check” will “look at the effectiveness, efficiency, coherence, relevance and EU added value of both regulations in contributing to the fight against illegal logging.” As the regulations are closely related, the Commission is carrying out a common evaluation to assess whether they are fit for purpose.

Opportunity for feedback is open until 26 November 2020.

The Deforestation and Forest Products Impact Assessment will contribute to an impact assessment investigating the suitability of “different demand-side measures to address deforestation and forest degradation associated with EU consumption”. The consultation will gather stakeholder opinions on potential additional measures to reduce the impact of products placed on the EU market.

Opportunity for feedback is open until 10 December 2020. 

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Supporting forest- and timber-based MSMEs in the Mekong region to operate legally and sustainably

Micro, small and medium enterprises (MSMEs) are a vehicle for development and generate almost half of jobs in the formal forest sector globally. They are key to local economies, generating significant livelihood and employment opportunities. Yet the recent economic crisis triggered by the COVID-19 pandemic has shown the vulnerability of MSMEs to sudden market developments.

Family-run workshop in a pilot MSME in Lamphun, Thailand. Source: EU FLEGT Facility

A new brief describes the approach adopted by the European Forest Institute (EFI) over the last five years to support forest- and timber-based MSMEs in the Mekong region to operate legally and sustainably.  The publication highlights the challenges and solutions tested, and lessons learnt from EFI’s interventions.

If MSMEs are encouraged to adopt legal and sustainable sourcing and processing practices, they can be part of the solution to reducing deforestation and forest degradation.

Growing their capacities, business performance and access to legal timber will allow these enterprises to participate in supply chains destined for regulated markets. This would in turn make them more resilient as businesses, with the potential to alleviate rural poverty and reduce impacts from crises such as COVID-19.

To this end, EFI has explored approaches that help forest- and timber-based MSMEs in the Mekong region to operate legally and sustainably. In six pilot projects in four countries – Laos, Myanmar, Thailand and Vietnam –  EFI tested solutions to some of the key challenges that MSMEs face: low productivity and operational capacity, lack of formal registration and operating licences, and poor representation in policy processes.

This work, supported by the Swedish International Development Cooperation Agency, shows that specialised trainings can improve MSME’s operational capacity and regulatory compliance. The potential for FLEGT Voluntary Partnership Agreement (VPA) processes to trigger and accommodate legal reforms in support of MSMEs is also highlighted.

EFI’s pilots demonstrate the importance of regulatory revisions for resolving key challenges to MSMEs, and the need for interventions targeting these enterprises to integrate business continuity planning. Crucially, supporting MSMEs to access finance is critical to support them to rebuild after COVID-19, and to operate legally and sustainably. 

Read the briefing:

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Trees give small farmers in Thailand access to loans

The EU FLEGT Facility has published a story describing how farmers in Thailand are starting to reap the benefits from international timber trade talks between Thailand and the European Union.

Mongkol Wandee measures a tree. Source: Somporn Khongthanakrittakorn, EU FLEGT Facility

Until recently, forest laws put limitations on farmers around the harvesting and transportation of certain tree species. Organisations such as the Private Forest Plantation Cooperative Limited – a cooperative of tree growing farmers and private land owners – used the trade talks to push for amendments to forest laws to improve the situation for farmers. 

In 2019, the Thai Government changed regulations regarding the use of trees on private land. Farmers can now legally harvest all trees on their land and get additional income from them without burdensome paperwork and/or field inspections.

Read the story on how this is impacting one farmer and his family in Thailand.

Author: Info

Evidence of VPA impacts: findings from Cameroon, Ghana and Indonesia

A study conducted in Cameroon, Ghana and Indonesia, three countries at different stages of implementation of Voluntary Partnership Agreements (VPAs), signed within the framework of the EU’s Action Plan on Forest Law Enforcement, Governance and Trade, showed that the VPA process contributed to significant improvements in various dimensions assessed.

Source: Ollivier Girard/CIFOR

Supported by the FAO-EU FLEGT Programme, the Center for International Forestry Research (CIFOR) conducted a study to gather evidence of the contribution of the VPA FLEGT process to four thematic areas:

  1. Sustainable forest management and forest conditions;
  2. Relation and development of the formal and informal forest sector;
  3. Jobs and employment;
  4. Governance, law enforcement and compliance.

Overall, the findings showed progress on many VPA-related targets, and that for most of the observed changes, VPA contribution is generally positive.

The most significant reported contributions of the VPA were found in the areas of Sustainable forest management and forest conditions, and Governance, law enforcement and compliance.

The full article with further details is available on the FAO-EU FLEGT Programme website

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Recognising Indonesian V-legal documents in China: Exploring the options

Under its Voluntary Partnership Agreement (VPA) with the European Union, Indonesia issues export licences attesting to the legality of its timber shipments to non-EU markets. These “V-Legal Documents” build on the same procedures followed in issuing Forest Law Enforcement, Governance and Trade (FLEGT) licences to the EU market. China does not however currently recognise V-Legal Documents as proof of legality for timber and timber products that it imports from Indonesia.

Furniture products are packed in warehouses ready for export to the foreign market. Source: Murdani Usman, CIFOR

Yet according to new research by the Chinese Academy of Forestry (CAF), doing so could pose opportunities for China and Chinese companies, along with some challenges.

CAF’s Research Institute of Forestry Policy and Information explored the recognition of Indonesian V-Legal Documents in China in a study undertaken between 2018 and 2019. The research is part of the work of the Bilateral Coordination Mechanism (BCM) on Forest Law Enforcement and Governance, which frames the collaboration between the EU and China on combating illegal logging and associated trade globally. The study built on a series of workshops facilitated by the EU FLEGT Facility in China.

Benefits identified by the research include simplifying due diligence for Chinese companies that exercise it, and promoting legal trade between China and Indonesia, and between China and international markets. It would also set a precedent supporting FLEGT. 

The study was conducted before China amended its Forest Law in 2020, prohibiting the purchase, transport and processing of illegal wood.

Next steps recommended by the study are a pilot project to explore how Chinese companies could integrate V-Legal Documents into their due diligence system; facilitating cooperation between Chinese and Indonesian industry associations; strengthening cooperation between the Chinese and Indonesian Governments in implementing their MoU on combatting illegal forest products trade; and raising Chinese company awareness of V-Legal Documents.

Author: Info

Evaluation of EU rules on illegal logging: public feedback opportunity

The European Commission has invited public feedback on EU action to tackle illegal logging – the harvesting of wood in contravention of the laws and regulations.

The public consultation on FLEGT and the EUTR is open until 28 February. Source: Robertus Pudyanto, EU FLEGT Facility

The EU has two key legal acts to fight illegal logging:

  • Forest law enforcement, governance and trade regulation (FLEGT) and
  • the EU timber regulation (EUTR).

This “fitness check” will according to the Commission examine the “effectiveness, efficiency, coherence, relevance and EU added value of both regulations in contributing to the fight against illegal logging globally. It will also include the implementing regulations of both instruments as well as the delegated regulation on Monitoring Organisations and will cover all Member States and relevant third countries.”

The evaluation will help assess whether the instruments are fit for purpose or need to be revised. It will also address the coherence between the regulations and “provide a very valuable input for the assessment of potential additional demand side measures.”

The review will cover the whole period since the instruments entered into force, with the focus on the implementation during the last three years, “given that in 2016 evaluations of the EUTR and of the FLEGT Action Plan were published. Furthermore, the FLEGT licensing scheme became operational in 2016.” 

The evaluation findings “will be considered in the assessment of demand-side measures for other commodities associated with deforestation.”

Opportunity for feedback is open until 28 February

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South-east Asian countries share progress to tackle illegal logging and its associated trade

The 7th Regional Training Workshop on Timber Legality Assurance took place from 19 to 21 November 2019 in Jakarta, Indonesia. Participants included representatives of nine member states of the Association of South East Asian Nations (ASEAN), China, Japan South Korea, the European Union, international organisations and the ASEAN Secretariat. They discussed their efforts to tackle illegal logging and its associated trade, and measures for trade in legal timber products.

Discussions on country progress on forest law enforcement, governance and trade. Source: EU FLEGT Facility

Delegates shared Indonesia’s experience with VPA implementation, FLEGT licensing and monitoring, and discussed progress in other ASEAN member states and in China, Japan, South Korea and the EU to ensure and document timber legality. Significant advancements since the last Timber Legality Assurance workshop in July 2018 in Thailand became apparent. Discussions also covered multi-stakeholder collaboration among ASEAN member states on forestry, governance and trade issues, and enhancing inter-agency coordination on environmental and forest law enforcement and management in the context of climate change. There was agreement on the need to improve understanding of the challenges and opportunities facing small and micro-economic entities to participate in legal and sustainable supply chains. 

 Participants of the workshop during the opening ceremony. Source: EU FLEGT Facility

Other topics covered were enforcement efforts for timber legality in ASEAN member states and the increasing importance of the legality of imported timber for Indonesia, Vietnam and Thailand in particular.

The workshop was co-organised by the EU FLEGT Facility, the ASEAN Secretariat, the Indonesia Ministry of Environment and Forestry, and the Indonesia Multi-stakeholder Forestry Programme Phase 4.

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Strong law enforcement drives responsible timber businesses in Ghana

The EU FLEGT Facility has published a story reporting how law enforcement and continuous checks on operators are transforming business practices in Ghana’s timber sector. Companies are making noticeable improvements, in particular in relation to environmental and social obligations.

The Ghana VPA has enhanced enforcement of health and safety requirements in forestry operations. Source: EU FLEGT Facility

Strengthened law enforcement is part of an ongoing effort in Ghana to improve the governance of the forest sector, and safeguard the long-term survival of the country’s forests. Law enforcement, as well as demands for better health and safety conditions by employees becoming more aware of their rights, and are yielding impressive results. 

Read the story: Strong law enforcement drives responsible timber businesses in Ghana

Author: Info