Thailand’s political unrest cuts down timber exports, traders in Three Pagodas Pass claim

Thu 11 Mar 2010, Kon Hadee
Timber sellers in Three Pagodas Pass have informed IMNA that interest from Thai buyers has dropped dramatically since the end of February, and that consequently their businesses are suffering; sources claimed that drops in timber purchases could be partially attributed to Thailand’s recent political upheaval.

According to timber traders from the Three Pagodas Pass region, starting in the 3rd week of February 2010, the merchants noticed a dramatic decrease in the number of Thai timber merchants importing wood from the area. The remaining Thai businesses who continue to purchase timber from Three Pagodas Pass are enjoying large discounts, as timber traders have been forced to lower product prices in the newly competitive buyers market. The price decreases have proved especially problematic to individuals who have invested large amounts of funds in their timber businesses.

“Timber prices are very low. Before, we got 13,000 baht for one ton of wood, but now we get only 8000 baht per ton. I am going to lose about 2000 baht per ton [with each sale]. Currently I keep my timber and do not sell; I am waiting to see what the prices are like. If the price [of timber] goes up, I am going to sell my timber. But currently I have to stop doing my job for a while,” claimed a timber seller, who told IMNA that he had invested over 1 million baht in his business.

This seller explained to IMNA that he’d originally purchased 100 tons of timber, at the cost of 1,500 baht a ton. Shipments are made in 1-ton increments; with each shipment, sellers must plan on paying roughly 1,500 baht at assorted checkpoints run by the Burmese army and various rebel groups, and 2,500 baht in labor costs. Transportation costs an additional 4,000 baht. The decreased price of timber since late February has made it impossible for this timber merchant, as well as his peers, to earn any sort of income selling their timber.

Another Mon timber trader from Three Pagodas Pass claimed that Thailand’s unstable political situation has discouraged Thai buyers from purchasing timber, as they themselves fear that they will be unable to resell their purchases in a chaotic political and economic environment.

On February 26th of this year, the Thai Supreme Court ruled to seize the financial assets of former Prime Minister Thaksin Shinawatra, who was removed from power in a 2006 political coup. The ruling has caused significant upheaval, and according to the British Broadcasting Company on March 9th, the Thai government has called for the establishment of a nation-wide “security act” between March 11th and March 23rd, when Thaksin supporters plan to hold demonstrations demanding that the current government call for new elections.

This trader also explained that selling unwanted timber inside Burma is not a financially viable option, as Burmese buyers will not pay for the timber cash down, but instead will only pay Three Pagoda Pass traders back after they also have resold their purchases.

“Even though the price of timber is going down, the tax we pay for timber has not gone down. This is also the main problem for us. If we are going to sell this timber inside Burma, we will not get money for the timber at once. We have to wait till they [timber traders inside Burma] resell the timber. So this is not ok for us or our businesses” he added.

A third timber businessman from the region claimed that this latest decrease in timber prices is the most severe since 1997. Starting in the summer of 1997, currencies around Southeast Asia dropped dramatically in value, after the Thai government changed the baht into a floating currency and subsequently caused the baht to collapse; between 1997 and 1998 the Thai baht’s value dropped over 40 percent. The crisis became regional, and currencies and stock markets throughout Southeast Asia plunged in value.