INTERNATIONAL TROPICAL TIMBER ORGANIZATION

ITTO

PRE-PROJECT DOCUMENT

TITLE STUDY ON UTILIZATION OF PLANTATION TEAK

SERIAL NUMBER PPD 68/03 Rev.2 (I)

COMMITTEE FOREST INDUSTRY

SUBMITTED BY GOVERNMENT OF MYANMAR

ORIGINAL ENGLISH

SUMMARY

Teak is world well known tropical specie due to its physical and mechanical properties. Teak naturally grow in 5 tropical countries in which Myanmar is one of them and her natural forest management has long life compare to any other country in the region. In Myanmar, teak plantations, although not big amount, were established since 1856. After 1980, the establishment of teak plantations was generated. The aim of the establishment of teak plantations is to reduce the pressure on natural forest so as to conserve them. On the other hand, it is intended to promote the foreign earning through exporting the plantation teak.

The major concern of this pre-project proposal is therefore to assess properties and processing technologies of local plantation teak, and through a regional workshop, formulate a project proposal that promotes a regional partnership to improve the efficient and diversified ulilization of plantation teak in key teak producing countries in ASEAN region.

It is expected that this pre-project will contribute to the promotion of a regional cooperation for downstream processing of timber utilization and marketing of value-added end-used products from plantation teak so as to increase the international trade in teak timber.

EXECUTING AGENCY FOREST DEPARTMENT, MYANMAR

DURATION 12 MONTHS

APPROXIMATE STARTING DATE UPON APPROVAL

PROPOSED BUDGET AND OTHER FUNDING SOURCES

Source

ITTO

Contribution in (US$)

80,000

Gov't of Myanmar 3,132,364 (kyat)

TOTAL 80,000

CONTENT

Page PART I: CONTEXT 1

1. Origin 1

2. Sectoral Policies 1

3. Programmes and Operational Activities 1

PART II: THE PROJECT 2

1. Project Objectives 2

1.1 Development Objective 2

1.2 Specific Objective 2

2. Justification 2

2.1 Problem to be addressed 2

2.2 Intended situation after pre-project completion 3

2.3 Project strategy 3

2.4 Target beneficiaries 4

3. Outputs 4

3.1 Specific objective 4

4. Activities and Inputs 5

5. Logical Framework 6

6. Work Plan 7

7. Budget 8 7.1 Budget By Activity: ITIO Contribution 8

7.2 Budget By Activity: Myanmar Contribution 9

7.3 Annual Budget by Source: ITTO Contribution & Myanmar Contribution 10

PART III: OPERATIONAL ARRANGEMENT 12

1. Management Structure 12

2. Monitoring, Reporting and Evaluation 12

PART IV: TROPICAL TIMBER FRAMEWORK 13

1. Compliance with ITIO objective ITIN 1994 13

2. Relationship to ITIO Action Plan and Priorities 13

Annex-1: Terms of Reference for Consultants 14

PART I: CONTEXT

1. Origin

Myanmar teak has been much used worldwide due to its unique qualities such as ease of workability, strength and durability. Productivity, however, is decreasing and the need for forming plantation is well pronounced today. Plantations of teak on small scale has been established since 1856, more attention was given in the 1960's, and increased efforts for establishing large-scale plantations were made in the early 1980's. Thus, there exists better chance in studying plantation teak at different ages and sizes. Forest Department (FD) has undertaken a study on teak plantations, funded by ITIO, under the Fellowship Programme of Ref.151/98S. Moreover, Myanmar has launched a Special Teak Plantation Programme starting in 1998. The present pre-project proposal is closely linked with ITIO's Fellowship Programme and the Special Teak Plantation Programme.

2. Sectoral Policies

Myanmar agenda 21 underscores the strategic course that the country can follow to promote and sustain the overall development in the country. The agenda identifies the forestry sector as "very important one to economic development in Myanmar". In regards with the sector, it identified five program areas to be addressed. They are:

Accelerate sustainable development of forest resources; Develop the forestry sector to meet basic needs; Promote efficiency in the production of forestry goods and services; Strengthen forestry policies legislation and institutions; and Enhance people's participation in forestry development and management.

Thus this pre-project is very much in line with Myanmar Agenda 21.

This pre-project is also in consistent with the basic principles of Myanmar Forest Law (1992). In its eight principles, the law states to develop the national economy, and to meet the basic needs of the public through the conservation and protection of forest plantations in which most of them are teak plantations. By giving good management to the teak plantations and by promoting the utilization of plantation teak, it would meet the development of the State.

The Myanmar Forest Policy 1995, Policy Statement includes the following strategic objectives, among others:

To promote the export of value-added forest products; To ensure that domestic requirement of all forms of processed timber is adequately met through domestic processing; and To promote efficient harvesting and sustainable utilization of all forms of forest produce.

This pre-project proposal has taken full cognizance of the above objectives.

3. Programmes and Operational Activities

Research activities on the properties of teak will be made at the Forest Research Institute (FRI) Yezin. The institute is facilitated with the laboratories, which are capable of implementing the activities. Teak samples of different sizes from plantations with ages 15, 20, 25, 30, 35, 40 and over 40 years will be collected by making thinning operations in these plantations. These timbers will be tested to understand physical and mechanical properties in relation to their respective age and size classes. The utilization potentials will then be assessed depending on the largest possible size and the properties of teak timber from different age classes. The plantation teaks would be utilized for various value added products using the facilities already installed at FRI and the designed and types of the products will be determined by the prevailing market forces, but with particular focus on export opportunities. This pre-project may, therefore, extend to a full-fledged project

with the experience gained because large-scale teak plantations have been formed in Myanmar since around 1980.

PART II: THE PROJECT

1. Project Objectives

1.1 Development Objective

To promote downstream processing and utilization of value added products of plantation teak on a sustainable basis.

1.2 Specific Objective

To assess properties and processing technologies of local plantation teak, and through a regional workshop, formulate a project proposal that promotes a regional partnership to improve the efficient and diversified utilization of plantation teak in key teak producing countries in ASEAN region.

2. Justification

2.1 Problem to be address

Timber export represents about 30% of national foreign exchange earnings. Forests are now degraded and deforested. Productivity has decreased due to illicit-cutting and agricultural encroachments. It is considered that end uses of plantation teak and its early economic returns with shorter rotation become increasingly important for both producers and consumers. Moreover, efficient utilization of teak with minimum processing waste of teak raw material is considered as today's major concern in Myanmar timber industry.

There is lack of research programmes to improve the productivity of the production of quality teak products from plantation teak in Myanmar. This pre-project intends to undertake research studies on properties and working characteristics of teak timber of different sizes and ages from teak plantations, as a pilot case. It is expected that this pre­project will contribute to the promotion of downstream processing of timber utilization and marketing of value-added end-used products from plantation teak so as to provide significant contribution to the international trade in teak timber.

Reasons for selection

The project will emphasize on testing timber properties and evaluating utilization potentials of teak of different size classes. Small timbers could become increasingly utilized for value-added products. Training, research and development activities of the project will place emphasis on efficient production of plantation teak provided that small­sized teaks are found suitable for different end uses.

Reasons for ITIO support

ITTO aspects

It is considered that the success of this project will also benefit other ITTO member countries, particularly towards the most efficient utilization of teak. ITIO has an accumulated knowledge and experience in utilization and marketing of forest products in worldwide context. It, therefore, turns out to seek ITIO's appropriate funding for this project through its special account.

Relationship to relevant actions by other donors

The project as designed and proposed will be implemented by FD with funding from ITIO and Government of Myanmar. There are no other donors for the project implementation.

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Risks

Some minimal risks may occur, such as delayed arrival of equipment machineries, difficulty in recruiting the consultants! experts at the right time, and likeliness of poor market access for finished products. All these risks could be resolved through consultative process prompt actions.

Characteristics of region

Teak samples for timber testing will be collected from the plantations established in 8ago Yoma Region, the best natural habitat of teak in Myanmar. Plantations of different ages already exist in the 8ago Yoma Region.

Other relevant aspect of pre-project situation

Despite appropriate actions being taken, teak yield from natural forests has been decreasing. It therefore needs to produce value-added teak products to catch more income. Myanmar Forest Policy 1995 also calls for phasing out timber export in the log form. Maximum yield by downstream processing is an urgent need. Increased utilization of plantation teak in the form of value added products through downstream processing would also reduce the prevailing pressure on natural teak forests of Myanmar.

2.2 Intended situation after pre-project completion

Plantation teak could be efficiently utilized for sustainable production of value-added commodities both for local and export demands. Faster and shorter rotation could be fixed, with better and early economic returns, taking into account environmental issues. Improved knowledge on downstream processing, manufacturing and marketing would be gained and disseminated. A full project proposal would be prepared for submission to ITTO.

2.3 Project strategy

The following approaches will be employed to meet the objectives set.

Literature and material collection

Literature and materials concerning the plantation forestry, physical and properties of teak, appropriate technologies for producing end-products have been in place. These materials will contribute as important references in implementing this project to meet its objectives.

Lessons drawn from past evaluation

Timber testing is the basic requirement for the production of appropriate end-use commodities. It is understood and accepted that production of wood articles such as furniture, parquet should be compatible with market demands and consumers' preference. In the past, FD was interested in national forest management and productivity of forests in log form, and less attention was paid on the production of value-added products. Now, utilization is increasingly prioritized.

Training and workshop

Overseas study in value-added timber production will be organized for key project staff. A regional workshop will also be held to disseminate the pre-project's findings, and to identify opportunities for the establishment of an information-sharing network among stakeholders in and outside the country being involved in downstream processing and utilization of plantation teak. The organization of the regional workshop will be undertaken in collaboration with ITTO. Major plantation teak producing countries such as India, Indonesia and Thailand will be invited to participate in the workshop. Participants of

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Myanmar will encompass stakeholders being involved in producing, downstream processing, utilization and marketing of plantation teak. About 50 international and national participants are expected to attend.

2.4 Target beneficiaries

It would be able to find out the optimal rotation length, which will render optimized economic returns, thus benefiting the Government, the FD and stakeholders in and outside the country being involved in downstream processing and utilization of planted teak. Properties of teak with different ages and sizes will be identified, which will benefit local manufacturers of furniture and other value-added commodities. Tropical countries would most likely be encouraged to plant more teak. In view of these, teak market will become more stabilized. Apart from this, biomass cover would be much improved due to extensive formation of teak plantations in the once degraded areas, and therefore environmental conditions would be further balanced.

Technical and scientific aspects

Wood properties of plantation teak of different sizes and ages and will be studied. Finished products from small to the largest available timber will be manufactured depending on both wood properties and market demands. Research on new designs of finished products and sample production would also be given priority to create market opportunities.

Economic aspects

FD would have more reliable facts on fixing optional rotation age for teak plantations. The pre-project will also provide major incentive towards the promotion of downstream timber industry in Myanmar that could result in improved competitiveness and market access. With increased economic returns from planted teaks, natural teak-bearing forests would be much safe and conserved.

Environmental aspects

Efficient processing will increase the outturn per unit volume of round logs, preventing increased cutting of raw materials. Increased biomass by forming more teak plantations in degraded forestlands will enhance the role of forests as carbon sink and environmental greening.

Social aspects

Once the present project could successfully have been implemented, increased formation of teak plantations in degraded forestlands will be taken place. It can provide employment opportunities in the countryside. Development of economically viable timber industry in the country would also create substantial number of additional jobs in the timber industry, including plantation works. Further, private sector will become more interested in making investment for establishing teak plantations.

Managerial aspects

FD will take the executing role and Myanmar Timber Enterprise (MTE) will be the supporting agency in implementing this pre-project. Two national experts will be recruited from the private sector, and will be responsible for inventory on teak plantation and production of value-added products and market intelligence.

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3. Outputs

3.1 Specific objective

To assess local plantation teak resources, disseminate findings through a regional workshop and formulate a project proposal that identifies measures to improve local value adding.

Output 1.1 Technical information on properties and utilization of local plantation teak collected.

Output 1.2 Regional workshop for dissemination of pre-project findings and workshop proceedings including invited papers and workshop outcomes.

Output 1.3 Project proposal addressing technical problems and commercialization of value-added products of planted teak in key teak producing countries in ASEAN region formulated.

4. Activities and Inputs

Output 1.1

Technical information on properties and utilization of local plantation teak collected.

Activities Inputs 1.1.1 Collection of timber samples from plantations. Project staff, skilled laborers. 1.1.2 Testing the properties and characteristics of FRI staff, Project staff, Timber

wood. testing facilities, Wood working (i) To test mechanical properties of various machines at FR!.

sizes of plantation teaks with different ages.

(ii)To test the natural durability of theses specimens.

(iii) To determine the physical properties (shrinkage, dimensional stability, density etc.)

1.1.3 Evaluate and assess technical problems in Project staff, FD and MTE the utilization of planted teaks. personnel

Output 1.2

Regional workshop for dissemination of pre-project findings and workshop proceedings including invited papers and workshop outcomes.

Activities Inputs 1.2.1 Conduct a four-day regional workshop in International{ national resource

Yangon. persons, FD, MTE, Private Sector, Project staff.

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Output 1.3

Project proposal addressing technical problems and commercialization of value-added products of planted teak in key teak producing countries in ASEAN region formulated.

Activities Inputs 1.3.1 Overseas study in value-added timber FD personnel

production 1.3.2 Submit a full project proposal addressing the Project Staff and ITTO.

existing technical problems in utilization and commercialization of value added products of planted teak.

5. Logical Framework

I Project Elements Verifiable Means of Important Indicators Verification Assumptions

Development Objectives

Promotion of downstream Expansion of Management Government processing and utilization of downstream Plan, Teak approves to value-added products of processing wood- Plantation reduce exporting plantation teak. based industries. Programme. log form.

Specific Objectives

To assess local plantation Mechanical, Results of wood Properties of teak resources, disseminate physical and testing, Workshop plantation teak will findings through a regional natural properties proceedings, improve local workshop and formulate a of plantation teak. Reports and value adding; project proposal that Project Proposal. Findings are useful identifies measures to for stakeholders. improve local value adding.

Output

1. Technical information on Assessment teak Technical Private sector is properties and utilization of plantations will be information, interested to local plantation teak done. documents and establish wood-collected. reports. based industries.

2. Regional workshop for Papers relating to Workshop and Adequate financial dissemination of pre­ pre-project proceedings. resources will be project findings and outcomes, papers provided, workshop proceedings from participating important including invited papers teak-producing stakeholders and and workshop outcomes. countries. participants will

attend.

3. Project proposal Project proposal. Reports and The full project is addressing technical Project Proposal. submitted to ITTO problems and for due commercialization of consideration. value-added products of planted teak in key teak producing countries in ASEAN region formulated.

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6. Work Plan

Outputs/ Activities

Output 1 Technical information on properties and utilization of local plantation teak collected. Activities: 1.1 Collection of timber

samples from plantations. 1.2 Testing the properties and

characteristics of wood. (i) To test up mechanical

properties of various sizes of plantation teaks with different ages.

(ii) To test the natural durability of these specimens.

(iii) To determine the physical properties (shrinkage, dimensional stability, etc).

1.3 Evaluate and assess technical problems in the utilization of planted teak.

Output 2 Regional workshop for dissemination of pre-project findings and workshop proceedings including invited papers and workshop outcomes. Activities: 2.1 Conduct a four-day regional

workshop in Yangon.

Output 3 Project proposal addressing technical problems and commercialization of value-added products of planted teak in key teak producing countries in ASEAN region formulated. Activities 3.1 Overseas study of key

project staff in value-added timber production.

3.2 Submit a full project proposal addressing technical problems and commercialization of value-added products of planted teak. I

Responsible Schedule in Months Partv 1 2 3 4 5 6 7 8 9 10 11 12

FD, Project staff. FRI, Project staff.

Project staff, FD, MTE.

Project staff, FD, MTE, ITIO.

Project staff I-

Project staff

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7. BUdget

7.1 Budget by Activity:

Outputl Activities

Output 1 1.1 Collection of timber

from plantations.

1.2 Testing the properties and characteristics of wood.

1.3 Evaluate and assess technical problems in the utilization of planted teak.

Output 2

2.1 Conduct a four-day regional workshop in Yangon.

Output 3 3.1 Overseas study of

key project staff in value-added timber production.

3.2 Submit a full project proposal addressing technical problems and commercialization of value-added products of planted teak.

Sub-total Budget ITTO

ITTO Contribution (in USD)

10 20 30 Project Sub- Duly

cersonnel contract Travel

2,500 4,000 1,000

1,800 1,000

2,500 500

4,800 4,000 20,400

4,000 2,000

2,000 500

17,600 8,000 25,400

40 Capital

Item

3,000

3,000

50 60 Total ConsumablE Miscella~ USD

Item neous

1,500 300 9,300

3,000 500 9,300

1,000 1,200 5,200

2,000 5,000 36,200

6,000

500 2,000 5,000

8,000 9,000 71,000

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7.2 Budget by Activity: Myanmar Contribution (in Myanmar Currency - Kyat)

Outputl Activities

Output 1 1.1 Collection of

timber from plantations.

1.2 Testing the properties and characteristics of wood.

1.3 Evaluate and assess technical problems in the utilization of planted teak.

Output 2

2.1 Conduct a four-day regional workshop in Yangon.

Output 3 3.1 Overseas study

of key project staff in value-added timber production.

3.2 Submit a full project proposal addressing technical problems and commercializati on of value-added products of planted teak.

Sub-total Budget ITIO

10 20 30 40 50 60 70 Project Sub- Duty Capital Consu- Miscella- Manage-

personnel contract Travel Item mabie neous ment Cost Item

440,000 28,600 77,294

440,000 77,294

440,000 77,294

440,000 77,294

440,000 77,294

440,000 77,294

2,640,000 28,600 463,764

Total Kyat

545,894

517,294

517,294

517,294

517,294

517,294

3,132,364

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7.3 Annual Budget by Source: ITIO Contribution (in USD) & Myanmar Contribution (in Myanmar Currency - Kyat)

Budget Item

10. Project Personnel

11. National Experts ( 12 Months)

1. One Project Director ( 102,000 Kyats/ Month)

2. One Administrative personnel ( 80000 kyats/ Month)

12. National Consultants

1. One Timber Testing and Supporting Consultant

( 600 USD/ Month x 3 Months)

2. Experts for Project Proposal Formulation

13. Other Labour ( 12 Months)

1. One Secretary ( 150 USD/ Month)

2. Two Hired Unskilled Labours ( 50 USD/ Month)

15. Fellowship, Training and Workshop

1. Overseas Study ( 2 persons x 2000 USD )

2. Regional Workshop

Resource Persons (12 persons x 400 USD)

19. Component Total

20. Sub-contracts

21. Sub-contracts for trucking of timber from plantations

22. Sub-contracts for Regional Workshop

(Audio-visual equipment & operators; Catering; Conference organizing etc.)

29. Component Total

30. Duty Travel

31. Daily Subsistence Allowance

1. International resource persons for Regional Workshop (6 persons x 4 days x 100 USD)

2. National resource persons & participants for Regional Workshop (50 persons x 4 days x 35 USD)

3. Operation

32. Travel

1. International travel (6 persons x 1500 USD)

2. Travel allowance for national participants (50 persons x 40 USD)

33. Transport Costs for operation

39. Component Total

ITIO Myanma~ (USD) (Kvat)

168,000

960,000

1,800

2,000

1,800

1,200

4,000

4,800

15,600 2,640,000

4,000

4,000

8,000

2,400

7,000

3,000 8,600

9,000

2,000

2,000 20,000

25,400 28,600

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--

I

I

MyanmarBudget Item ~TTOUSD) (Kyat)

50. Consumable Items

51. Accessories and Spares 3,200

52. Fuel and Utilities 3,000

53. Printed materials, Conference Papers/CD, Office Supplies 2,000

59. Component Total T,200

60. Miscellaneous

61. Auditing and Sundry 4,000

62. Regional Workshop (Venue hire, Opening ceremony, Welcome function, Dinner, Phone/Mail/Email, Fees, Poster/Display, etc.), Meetings and Reports 4,800

63. Contingencies (CFC Monitoring) 5,000 . ­

69. Component Total 13,800

Sub-total I: Budget by Activity 71,000 2,668,600

70. Management cost for the project

(15% of the total budget by activity: ITTO and Counterpart) 463,764

79. Component Total 3,132,364

80. ITTO Monitoring and Evaluation

81. Monitoring and Evaluation costs 3,074

83. Programme support costs (8%) 5,926

79. Component Total 9,000

100. GRAND TOTAL 80,000 3,132,364

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PART III: OPERATIONAL ARRANGEMENT

1. Management Structure

FD, being responsible for the management of forest resources within the overall context of sustainable development, is responsible for the sustainable supply of raw materials to meet timber requirements. Properties and utilization of teak would be studied at the Forest Research Institute (FRI) of the Forest Department. Therefore, the FD, in the capacity of the executing agency, shall assign the Director of FRI as the project leader. Project staff will include personnel form FD.

The Director-General of FD shall take the full responsibility for overall directional progress to the project. Project leader and project coordinator will be responsible for the implementation and progress of the project works, budqet expenditure accounts and reporting.

2. Monitoring, Reporting and Evaluation

(a) Project Progress Report

A progress report on the project activities and achievements shall be prepared and submitted to ITIO after six months once the project is started. Monthly progress report will be submitted by the project leader to the Director-General of the Forest Department.

(b) Project Completion Report

It shall be prepared and submitted to ITIO within two months after completion of the project.

(c) Project Technical Report

Project Technical Reports will be submitted to ITIO within three months of Project Completion. Midterm technical reports will be submitted to ITIO when any assigned outputs have been achieved according to the work plan. The reports will be made in conformity with the ITIO Manual for Project Monitoring, Review and Evaluation.

(d) Monitoring and Evaluation

The project steering committee will visit the project site during the project period. Monitoring visits by ITIO representative(s) will also be paid at the appropriate time. This project will be SUbjected to monitoring and reviewed according to, ITIO's guidelines. The project will be subjected to mid-term evaluation if necessary.

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PART IV: TROPICAL TIMBER FRAMEWORK

1. Compliance with ITIO objective ITIA /1994

This project proposal meets objectives (c), (d), (f), 0) and (rn) of ITTN 1994. The proposal complies with all of the five criteria as follows:

(a) It is related to the production and use of industrial tropical timber.

(b) It will yield benefits to the tropical timer economy as a whole and relevant to both producing and consuming countries.

(c) It is related to maintaining and expanding the international trade in tropical timber.

(d) It offers reasonable prospects for positive economic returns in relation to costs.

(e) It makes maximum use of existing research institutions and avoids duplication of effort to the maximum extent.

2. Relationship to ITIO Action Plan and Priorities

This project proposal is directly related to the following activities identified in the Action Plan of the ITIO Committee on Forest Industry.

(a) Promotion and development of high value-added products in producing countries.

(b) Improving the marketing and distribution of processed tropical timber products.

(c) Introduction and demonstration of innovation methods of production and application.

(d) Enhancing the role of the private sector.

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Annex-l

Terms of Reference for Consultants

National Consultant (Timber Utilization)

1.� Responsibility�

Assist Project leader in timber processing and utilization.�

Development new designs of finished products.�

Organize and conduct timber processing training.�

Prepare and submit report to the Project leader.�

2.� Qualification and Experience

Master's degree in timber processingl utilization.

Vast knowledge in forestry.

A minimum of five years' experience in timber industry and acceptable to both

FDand ITIO

3. Duty Station:� FRI, Yezin, Pyinmana.

4. Languages:� Myanmar and English

14�