SmEs in the forest and timber sector can include individual tree growers, plantation smallholders4 community forest and village forest entities, household entities5, small-sized entities in the primary and secondary processing sector, traders and community entities. Among the 14 supply chains analysed, the main actors in the four countries are individual tree growers and timber processors that operate formally or informally. In most countries, having a business registration is a key indicator that distinguishes between formal and informal businesses. For example, in Vietnam, business registration is the criteria used by the General Statistics Office to differentiate formal from informal businesses6.
The assessments found that individual tree growers are an increasingly significant source of timber for the national timber industry in the four countries. In Vietnam, the 1.4 million tree growers possess an average of one to two hectares of forestland per household. They play a crucial part in the plantation timber supply chain. They annually produce approximately 10 million cubic metres of timber with a value of USD 500-700 million7. This production feeds the wood chip and value-added timber processing industries for domestic and international markets. In addition, one study estimated that there are more than 300 wood villages in Vietnam. These wood villages employ tens of thousands of households and hundreds of thousands of labourers, including both household and hired labour in the manufacturing process of timber products8. In Lao PDR, only approximately 17 percent of household timber-processing entities are registered. The situation in Myanmar/Burma is unknown because official data does not capture businesses that operate without registration9.
SmE operators and traders often use their houses as storefronts and processing workshops. This practice contributes to unsafe and unhealthy working conditions. In particular, the assessments have found lower level of compliance with occupational health and safety and environmental standards.
SmEs mainly produce for the local market. In contrast, the medium to large-sized processing enterprises mostly comply with the national requirements for registration. Their market reach is far greater and wider than that of SmEs. In general, the assessments found that the percentage of timber processing households operating in the four countries with business registration is significantly lower in comparison with unregistered entities.
Finally, the assessments indicated that in the four Mekong countries, a majority of individual tree growers and processing SmEs are not part of any business association or any form of sector organisation, whether they operate formally or informally. The legal frameworks in these countries enable the formation of groups, cooperative enterprises and industry associations. However, the assessments found that individual tree growers and processing operators, in particular in Lao PDR and Myanmar/Burma, do not regard membership of business associations as beneficial. Nonetheless, in practice, the national timber industry associations in Lao PDR and Myanmar/Burma are influential. They gain preferential treatment with respect to access to timber sold at auctions for example. They are also consulted in the setting of timber quotas and in regulatory reform processes. When SmEs do not participate in these structures, they are often unaware of relevant information related to applicable regulations, support initiatives and other business development opportunities. This in turn makes cooperation among SmEs more challenging. Cooperation could help them obtain common benefits such as increased market access, larger job orders, material procurement, and access to training and technology.