Legal framework for forest management and timber trade of Myanmar

Forest governance

In Myanmar, the State owns all lands.The responsibility for management of forest resources rests with the Forest Department (FD), a division of the Ministry of Natural Resources and Environmental Conservation (MONREC).

Myanmar forests are managed following a 30-year Master Plan for the period from 2001 to 2031, 10-year forest district management plans and annual operational plans.

Proposed amendments to the Forest Law have resulted in the “2017 Forest Bill” and the new forest law was enacted in September 2018. The new law highlights non-state ownership of teak, community forestry rights, anti-corruption and bribery, and provides for tougher penalties for offences and penalties.

Legal rights to harvest

The basic management principle for forests in Myanmar is known as the Myanmar Selection System (MSS). Under the MSS, forest lands are organised into felling series, each of which is divided into 30 blocks of approximately equal yield capacity. One block per year is harvested and the whole felling series is worked in the course of a 30-year felling cycle. In each block due for harvest, marketable trees with diameter at breast height (DBH) at or above the fixed exploitable limits (which vary depending on forest type) are selected and cut. The extracted volume must be within the bounds of the Annual Allowable Cut (AAC), which is determined for each felling series based on the principle of sustained yield management.

By law, only the state-owned forest enterprise (Myanmar Timber Enterprise, MTE) has the right to extract timber.

Myanmar is sub-divided into what are called Timber Extracting Agencies, which often overlap the administrative boundaries of regions or districts. The MTE is a commercial enterprise under MONREC. The private sector was also involved in wood processing and processed exports. Previously subcontractors were permitted to extract timber in areas that were under control of non-state armed groups. This was discontinued by MONREC Notification Letter No.1125/2015 issued in June 2015.

Community forestry has developed slowly in Myanmar. To date no commercial extraction by communities has been possible (EFI, 2011). The MTE may grant some management rights of forest land to a private company, and this contractor needs to obtain harvesting rights through a timber extraction contract that covers the relevant area of extraction. For districts directly under MTE management harvesting rights are obtained through an Extraction Permit.

Taxes and fees

Section 21(c) of the Myanmar Forest Law 1992 stipulates the need to pay the royalties, security deposits and advances due for forest produce.

Royalty rates vary with teak and hardwood species groups. For teak species the current royalty fee is around US$20 (30,000MKK) for one round log ton. There are 5 further species groups, and a range of forest products with various fees.

Most royalty payments are made to the Forest Department and deposited in state budgets. For some species groups royalties are made directly to State/Regional Government.

Timber harvesting activities

The Forest Department needs to approve a 10 year Forest Management Plan together with records of Hammer mark registration. The forest management plan is based on the extrapolation of annual inventory data, from which annual management plans are prepared. Together with an Extraction Permit, an Operational Extraction Permit is supplied by the MTE before entering the forest for harvesting combined with Boundary Maps, a Harvesting monitoring report and Felling and Log registers.

As noted above only MTE has the right to extract timber.

Third parties’ rights

IMPORTANT: The Myanmar SFM Standards currently (2019) under development and finalization are not mandatory legal requirements.

Nevertheless, the SFM Standards will be those submitted for PEFC endorsement (see Third Party Certification below). Myanmar’s SFM Standards for Natural and Plantation Forests contain a principle, criterion, indicators and verifiers to define and protect ‘long-term tenure and use rights to the land and forest resources’.

In 2017 Myanmar implemented a forest activity “Community Monitoring and Reporting System”.

Trade and transport

In terms of traceability each extraction agency has been allocated a specific sign which is stamped on all logs from that agency (area). All logs should be marked with the specific hammer-mark of the extraction agency, enabling traceability to the level of extraction agency. The hammer marks are applied to the stem of trees to be felled as well as to the end of logs at various points for the transport of logs from the forest to processing or export from the port in Yangon.

The physical flow of timber from the forest to export markets or domestic industry is limited to official MTE depots. The strictest forms of control are exerted for teak logs, which, theoretically, shall all be transported to MTE log depots in Yangon for re-distribution. This excludes low grade teak logs which can be sold locally. In terms of legality it is key that the Royalty Mark is present on the log, since this signifies that all applicable royalties have been paid (NEPCon, 2013).

The Myanmar Timber Merchants Association compiled a compilation of export documentation to assure that the buyer of timber products from Myanmar that the exporter has complied with the legal and procedural requirement. This list includes:

• Certificate of Incorporation
• Exporter-Importer Registration
• Certificate of Membership of the UMFCCI
• Myanmar Forest Products Merchants Federation Membership Certificate
• Certificate for Legality of Forest Products
• Export Licence
• Export Declaration
• Bill of Lading

According to the 2016 MONREC Letter to the Union Government Forest 4/1/04/D1/1873/2016 exports can only be carried out through three designated ports in Yangon (the ‘Old Port’, the. Asian World Container Port (AWCP), and the Myanmar International Terminal Thilwa (MITT).

In 2017 open tenders for log sale to private companies were introduced, along with a computerized system of log registration.