General Economic Background – Despite weak economies across the globe, Southeast Asia remains resilient. The region’s relatively low levels of debt, compared to many developed western economies, have enabled countries in the region to undertake programs to increase domestic spending and stimulate their economies. Malaysia’s GDP in the fourth quarter of 2012 grew 6.4% year-on-year – all sectors of the economy experienced growth, but services, manufacturing, and construction led the way. Despite the fact Indonesia is one of the most resilient countries in the region, its GDP only grew 0.1% in the last quarter of 2012. The Philippines’ GDP grew to 6.8% in 2012, which was right in line with the government’s targeted growth range. Vietnam’s GDP experienced the slowest rate of growth since 1999, with a 2012 increase of 5%. The Organization for Economic Cooperation and Development (OECD) believes that growth in the region will become less reliant on exports than in the past. In-country demand is increasing, which limits the goods available for export.
Trade Data – Over the last few years, Indonesia, Malaysia, Thailand, Singapore, Vietnam, and the Philippines have imported an increasing amount of softwood lumber and builder’s carpentry products from the United States. The majority of this material is used for their developing infrastructure, as well as for manufacturing furniture. A total of $48 million of U.S. softwood lumber was exported to Southeast Asia in 2012. Of the six Southeast Asian countries, the Philippines and Indonesia are the largest U.S. markets for softwood lumber. These two markets continued to grow from 2011 to 2012. In 2012, the US held 28% of the market share in the Philippines, increasing from 12% in 2011. The U.S. holds the largest share of the market in Indonesia (45%), followed by New Zealand with a share of 38%. Although they are smaller markets than Indonesia and the Philippines, the U.S. does export softwood lumber to Malaysia, Thailand, Singapore, and Vietnam. In 2012, the U.S. exported more than $13 million to Malaysia, Thailand, Singapore, and Vietnam – more than a $7 million increase from 2011. These four countries cannot be ignored – they all have tremendous potential when it comes to importing more U.S. softwood lumber in the future.
Strengths: Sustainably harvested wood; consistent product; good track record in trade with SE Asian region
Weaknesses: Shipping costs; US sawmills’ focus on domestic market
Opportunities: Increase SE Asian’s knowledge of US softwood lumber products for increased use in construction and furniture manufacturing; hardwood species such as rubberwood are disappearing, which leaves a hole for U.S. softwood species to fill
Threats: Other exporting countries such as Canada and New Zealand that have a stronger export focus than the US; New Zealand’s closer proximity to SE Asia