ASEAN: Regional Trends in Economic Integration, Export ... - USITC

engineered flooring, and other products. Similarly, investments in oil palm are envisioned
to supplement wood supply for plywood and other wood products. 77 The plywood
industry is slowly adapting to smaller diameter rubberwood and oil palm trees that can be
used after their productivity for latex and oil wanes (see box 5.1). The continuing
addition of rubberwood and other forest plantations is expected to add to the region’s
wood supplies and therefore contribute to ASEAN competitiveness.
BOX 5.1 Hardwood plywood and flooring: Profile of ASEAN integration
By most measures of cross-border investment and cross-border links in manufacturing, the hardwood plywood and
flooring industry has not experienced significant regional integration. The industry is highly parochial because of its
long-established history within the major producing countries and close linkages to locally available forest resources.
Nevertheless, there are instances of plywood and flooring companies investing and/or operating in more than one
ASEAN country. The most successful cross-border investments involve vertically integrated companies. For example,
one Malaysian company is in both the oil palm and the wood flooring business. a It manufactures flooring in Malaysia
and maintains oil palm plantations in both Malaysia and Indonesia. Although the technology is not yet fully
commercialized, oil palm wood is beginning to be used for core layers in some plywood manufacture. The potential
advantage of using oil palm wood in plywood production is that it would reduce reliance on wood from natural forests.
Some regional integration is also occurring by virtue of FDI from outside of ASEAN. For example, Taiwanese
companies are reportedly sourcing lumber and veneer of coconut palm from Indonesia and sugar palm from Thailand
for use in furniture and flooring products manufactured both in Vietnam and in Taiwan. b
ASEAN efforts to reduce and eliminate intra-ASEAN tariffs on hardwood plywood and flooring may provide additional
opportunities for regional industry integration. If tariff elimination makes it more economically attractive, core plywood
material could be imported from another ASEAN country and finished with a locally manufactured decorative outer ply
or “wear” layer. Similarly, wood laminate flooring uses medium-density fiberboard (MDF), which could be imported
and finished with a locally printed paper and melamine overlay, assuming there are cost-savings or other advantages
for doing so.
a The company referenced is TSH Resources Berhad, which has a wood flooring subsidiary called Ekowood.
b Industry representative, interview by USITC staff, Washington, DC, March 30, 2010.
Trade Facilitation, Logistics Services, and E-Commerce
Trade Facilitation
ASEAN trade facilitation efforts have led to some improvements—streamlining
procedures at ports of entry and harmonizing documentation requirements—that have
benefited trade in hardwood plywood and flooring, along with trade in the region more
generally. 78 Further progress is anticipated over the next several years through the
development of national and ASEAN single windows. 79 Considerable effort has also been
made to harmonize intra-ASEAN tariffs and trade by implementing a common 8-digit
tariff nomenclature based on the Harmonized System (HS), although not all ASEAN
countries are reporting both trade data and applied tariffs consistently yet. 80
77 Industry representative, interview by USITC staff, Kuala Lumpur, March 11, 2010.
78 Ibid., March 12, 2010.
79 See discussion on trade facilitation in chap. 2.
80 ASEAN official, e-mail message, April 21, 2010. Not all ASEAN members are reporting trade and
tariff data at the same level of detail for external as well as intra-ASEAN trade, nor are all members using the
most recent 2007 ASEAN Harmonized Tariff Nomenclature (AHTN).
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