Furniture Sector Sees Better Sales; Exports Seen Surpassing $500M

The domestic furniture industry expects a more vibrant 2013 with the strong construction sector, the continued BPO growth, and more foreign buyers tapping local products despite a surge in imports.

Nicolaas K. De Lange, president of Chamber of Furniture Industries in the Philippines, said local furniture companies sales already reached $750 million of which local sales account for $200 million and exports of over $500 million.

Imports, however, have been estimated at $300 million following a surge in the past two years of furniture imports coming from China and other ASEAN countries. He even noted that most imports are even undervalued. If the price of imports is twice as much or $600 million, this would mean P24 billion.

"Even if we can only get 10 percent of that, that's huge already," he said.

But De Lange said that despite the surge in imports, local furniture sales are improving because of several factors working in favor of the industry.

For one, he said, the industry's growth gets a lot of boosts from the booming construction sector. Some furniture manufacturers have tied up with the real estate developers. The strong BPO sector has also fueling demand for local furniture.

The furniture shows in March last year in Cebu and in Manila should give the local industry a big boost.

"Buyers were pleasantly surprised of what they saw; after that buzz we are expecting more buyers will come and that will translate to higher sales to happen in second half of 2013. So 2013 growth is faster," De Lange said.

For 2012, the industry's export was expected to hit 7-8 percent or $200 million from $170 million in 2011. In the first four months of 2012, the industry exported $50 million.

De Lange said the furniture industry, which is mostly wood-based, has suffered from the high cost of wood following the imposition of total log ban.

According to De Lange, the local furniture industry, which is mostly wood-based, has suffered from the high cost of wood following the government's imposition of a total log ban. Cost of wood has increased from to P65 to 75 per board foot from only P40 before the log ban.

Aside from the log ban, De Lang said an EU ruling requiring all furniture exporters to get a certification attesting their products are not illegally sourced would make wood exports more difficult. The EU has also imposed a stringent accreditation process.

"We are working on our accreditation," he said. The Philippine government has yet to write EU of its proposed accreditation system. This is however expected to take long based on the experience of Indonesia, which has just gotten its accreditation after working on it for five years.

The Philippines, however, can argue that the current total log ban policy is good proof that its wood products are not illegal sourced.

In the case of De Lange, who owns one of the country's biggest furniture firm Designs Ligna, he has been a certified importer of kiln dried lumber from Germany. It is also difficult to import wood because the minimum is a container load. In addition, the Department of Environment and Natural Resources regulates wood importation.

While the Philippines cannot be a volume player, Filipino furniture makers should be able to concentrate on niche market by going into high value products.

He said that Filipinos are known for their craftsmanship and skills. The furniture chamber has a total of 2,500 players most of them are micro players.

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