PETALING JAYA: Malaysia’s timber industry is poised for long-term growth amid rising global demand for renewable materials and increased investment in tree plantations.
Member of Parliament for Julau, Sarawak, Datuk Larry Soon said the Malaysian timber industry is poised for a challenging yet promising future beyond 2025.
“With global demand for sustainable and renewable materials on the rise, the timber sector holds significant potential,” he told SunBiz.
Soon said Malaysia’s abundant natural resources, coupled with technological advancements in sustainable forestry practices, position Malaysia as a leading player in the global timber market.
However, he said that navigating geopolitical and economic uncertainties will require resilience and strategic adaptation. “Rising production costs and global trade tensions pose real challenges, but they also present an opportunity for innovation.”
By diversifying export markets and strengthening partnerships, particularly with emerging economies, Soon said, Malaysia can mitigate the risks of over-reliance on traditional markets.
Furthermore, Malaysia’s commitment to sustainability through initiatives such as the Malaysian Timber Certification Scheme will enhance the industry’s competitiveness and align with global trends favouring responsible sourcing, he added.
Soon said the industry must invest in cutting-edge technologies, improve operational efficiencies, and prioritise sustainable practices. “Together with a forward-thinking regulatory framework, Malaysia’s timber sector is well-positioned to thrive in a rapidly evolving global marketplace.”
Malaysian Timber Association president George Yap expressed optimism about the industry’s long-term prospects although acknowledging short-term challenges in 2025.
“The timber industry is on the rise from 2025 onwards. From sunset industry to sunrise,” Yap told SunBiz.
He attributed this growth to the global shift towards renewable materials, with timber being one of the most sustainable options.
Yap highlighted that timber’s circularity is well-established and easily scalable. “At the end of its lifecycle, timber products can be easily recycled and upcycled.”
Yap said the circularity of timber is much established, and easily scalable.
He noted that tree plantations have become a hot topic, particularly in Malaysia’s timber industry. He said the country is well-positioned for this, benefiting from abundant sunlight, rainfall and fertile soil compared to other nations.
“The value and revenue potential of tree plantations are vast, spanning timber products, paper and pulp, biomass for energy, ESG conservation efforts, and possibly carbon credits.”
On the short-term outlook, Yap pointed to challenges such as China’s housing overbuild, which has weakened demand and led Chinese players to enter the Malaysian market, increasing competition.
“Malaysia’s raw material supply is scarce. That’s why industry players are engaging with policymakers to establish a clear direction for long-term tree plantation development. With a solid policy in place, financial institutions can support the sector with confidence,” he said.
Additionally, Yap said the China-US trade war may push Chinese investors to set up operations in Malaysia. “Malaysian players may face challenges, but overall, Malaysia’s timber trade could see growth in the US market,” he added.
As for the European Union (EU) market, Yap highlighted uncertainties surrounding the European Union Deforestation Regulation (EUDR), which will be enforced by the end of this year.
“In the short term, this will impact Malaysia. However, in the long run, we can overcome it, as Malaysia’s compliance standards are significantly better compared to other timber-producing countries supplying the EU,” he said.
The EUDR, which came into force on June 29, 2023, aims to curb deforestation by regulating imports of commodities such as timber, palm oil, soy and coffee. It replaces the EU Timber Regulation and imposes stricter compliance requirements on businesses exporting to the EU.
Under the new regulation, companies must ensure that their products do not originate from recently deforested land or contribute to forest degradation. Additionally, EU importers will be required to trace commodities back to the specific plot of land where they were produced and comply with laws on land use, labour rights and human rights.
The regulation officially takes effect on Dec 30, 2025, for large and medium-sized companies, while smaller enterprises will have until June 30, 2026, to comply.
This presents a challenge for Malaysia, as it is one of the five largest timber and palm oil exporters to the EU.
If Malaysia is classified as a “high-risk” country under the EUDR, Malaysian timber imports will face stricter due diligence and increased customs checks, particularly affecting exporters from Sarawak.
Despite global challenges, Malaysia’s timber industry saw a 4.9% increase in exports in 2024, reaching RM22.9 billion compared to RM21.85 billion in 2023, according to the Plantation and Commodities Ministry.
Minister Datuk Seri Johari Abdul Ghani highlighted a 33.3% rise in Bumiputera timber exports, which totalled RM44.03 million. However, Bumiputera participation in the sector remains limited, with most businesses classified as small or micro enterprises.
“Bumiputera entrepreneurs contribute less than 1% of Malaysia’s total timber exports. Most companies remain small-scale, facing challenges in expanding their reach,“ he said at the Symposium on Empowering Bumiputera in the Timber Industry.
