Indonesia

Indonesia seals FTA with EAEU, eyes wider Eurasian market access

On December 21, the Indonesian government signed a Free Trade Agreement (FTA) with the Eurasian Economic Union (EAEU), aimed at reducing trade tariffs and expanding the reach of national products to nontraditional markets.

The trade pact consists of 15 chapters covering areas of mutual growth such as market access, trade facilitation, and economic cooperation. Through this agreement, the EAEU has formally committed to granting preferential tariffs on 90.5% of tariff lines for Indonesian products. This is expected to boost exports of Indonesian palm oil and its derivatives, footwear, textiles and textile products, fishery products, natural rubber, furniture, and electronics.

Indonesia allocates Rp2 trillion to boost textile, furniture exports

On December 23, Indonesian Finance Minister Purbaya Yudhi Sadewa announced at a press conference held at the Ministry of Finance office in Jakarta that Rp2 trillion has been allocated for textile and furniture businesses. Companies can access this funding through Indonesia Eximbank at an interest rate of 6%.

The Indonesian Chamber of Commerce and Industry noted that the global furniture export market is valued at approximately $300 billion, while Indonesia's current share is only about $2.5 billion. This indicates that despite the vast potential of the global export market, the contribution of Indonesia's furniture industry remains relatively small.

Indonesian Furniture and Craft Association (HIMKI) Chairman Abdul Sobur said his association hopes for concrete government support, including interest rate reductions or access to low-cost financing.

Meanwhile, the business community has suggested diversifying export destinations, as Indonesia's furniture exports are currently highly concentrated in the United States, accounting for about 60% of its total exports.

Indonesia doubles forest ranger numbers and revokes 22 PBPH permits

On December 15, Indonesian Forestry Minister Raja Juli Antoni revealed at a press conference in Jakarta that the President had ordered a doubling of the number of forest rangers to strengthen supervision and prevent forest encroachment and illegal logging.

Antoni cited Aceh Province as an example, where a forest area of 3.5 million hectares is patrolled by only 30 to 32 rangers.

Later, he reported that his office had revoked 22 PBPH (forest utilization business permits), covering a total area of 1,012,016 hectares.

It is reported that following the flash floods and landslides in Aceh, North Sumatra, and West Sumatra on November 25, the government has conducted rigorous assessments and audits of many enterprises involved in forest product processing.

Indonesian minister reaffirms mandate to protect Indonesia’s forests

In a statement issued on December 4, 2025, Indonesian Forestry Minister Raja Juli Antoni emphasized the President's directive to protect forests and exercise high caution when issuing permits.

Antoni stated that the President had given clear instructions to avoid issuing new Forest Utilization Business Licensing (PBPH) permits that allow logging activities. He confirmed that all PBPH licenses issued during his tenure had been limited to environmental service projects supporting afforestation.

Antoni further highlighted the President’s broader forest-protection initiatives, including the establishment of the Forest Protection Task Force (Satgas PKH), the rehabilitation of 12 million hectares of degraded land, and Prabowo’s decision to donate his private land in Aceh for Sumatran elephant conservation. The task force has seized 3.5 million hectares of illegal oil-palm plantations and continues actions against illegal mining.

Malaysia

Malaysian timber industry calls for exemption of 5% sales tax on sawnwood

Recently, a Malaysian Senator and Chairman of the Malaysia-China Business Council suggested the government exempt sawnwood from the 5% sales tax and review its stance on expanding the scope of the Sales and Service Tax (SST). He argued that current measures have imposed a double taxation burden on the timber and wood products industry.

The Malaysian Timber Association (MTA) has expressed agreement with this call. MTA Chairman pointed out that since the government implemented the new SST policy in July 2025, sawnwood classified under HS code 4407 has been subject to a 5% sales tax. When the sawnwood is subsequently used for domestic furniture manufacturing, the finished products incur an additional 10% tax. This has significantly increased costs across the furniture manufacturing supply chain, severely disrupting the overall economic value chain.

The association also noted that while the government's promotion of Industrial Tree Plantations (ITP) is beneficial for long-term sustainability, the raw material gap during the transition period still affects mid-term planning and investment confidence. Moreover, without financial support, related policies are difficult to align with the industry's actual needs.

Malaysian government to halt new plantation land development

Malaysian Minister of Plantation and Commodities, Johari Abdul Ghani, stated that the government will no longer permit the opening of new land for plantations, aiming to reduce human-wildlife conflicts caused by the loss of forest habitats.

Johari explained that expanding plantation areas by clearing forests exacerbates conflicts between humans and protected wildlife, such as tigers and tapirs. These animals are forced to enter populated areas more frequently due to habitat loss. He further emphasized that all economic activities should not lead to further deforestation. Instead, the focus must be on increasing productivity on already developed land.

Malaysian Palm Oil Council remains EUDR ready

In response to the EU's decision to delay the implementation of the EU Deforestation Regulation (EUDR) by another 12 months, the Malaysian Palm Oil Council (MPOC) stated that the country's palm oil exporters will continue to meet all regulatory requirements of the EUDR.

MPOC stated that Malaysia has made significant progress in traceability readiness through its National Traceability System. This system integrates certification data, geographic coordinates, and verified transactions, enabling centralized access to EUDR-related information and sharing with EU partners.

Malaysian Matrade partners with e-commerce giant to expand U.S. furniture market

The Malaysia External Trade Development Corp (Matrade) has partnered with global e-commerce giant Wayfair to help Malaysian exporters gain a larger share of the lucrative US furniture market. The collaboration also aims to accelerate the digital transformation of local furniture exporters.

In a statement, Matrade said this initiative targets the $200 billion U.S. furniture market, where online sales now account for over half of total market sales, approximately $115 billion.

Matrade CEO Abu Bakar Yusof pointed out that Malaysia is currently the sixth-largest furniture supplier to the U.S., holding a 2.4% market share. The current global tariff landscape also presents new opportunities for Malaysia, as U.S. buyers are shifting sourcing destinations to countries like Malaysia. From January to November 2025, Malaysia's furniture exports to the U.S. grew by 3.8% year-on-year to RM 5.7 billion, with the U.S. remaining Malaysia's largest furniture export market.

Thailand

Government to impose VAT and customs duties on imports from January 2026

Deputy Government Spokeswoman Lalida Periswiwatana announced that from January 1, 2026, the government will begin implementing a VAT (Value Added Tax) and customs duties for all imported goods, starting at a value of 1 baht. 

This policy ends the previous exemption on customs duties to promote fair trade practices and protect Thai businesses.

The Deputy Spokeswoman clarified that until December 31, 2025, only a 7% VAT is being collected, with no customs duties. From 2026 onwards, both VAT and customs duties will be levied according to the customs tariff for each type of product.

Thai House of Representatives submits Draft Forest Plantation Act

According to a December 7 report on the Thai Parliament TV website, the Thai House of Representatives has submitted a new draft Forest Plantation Act to the Cabinet to promote the growth of economic forest areas. This draft law aligns with the National Forestry Policy and the National 20-Year Strategic Plan (2018-2037), which sets a target for at least 40% of Thailand's land to be forested—25% as conservation forests and 15% as economic forests. Currently, the area of economic forests in Thailand is relatively small.

People's Party MP Manop Kiriwat believes increasing the economic forest area could boost Thailand's GDP by 0.5%, and processing wood into furniture can create significant added value. He argued that establishing plantations does not destroy forest resources; on the contrary, it increases green areas and brings substantial economic benefits to the country.

China

China's furniture exports surge 14.7% in November

Data from China's General Administration of Customs shows that China's exports of furniture and parts surged 14.7% month-on-month in November 2025, reaching 38.38 billion yuan. This robust rebound was not limited to furniture; lighting fixtures and fittings recorded an explosive 20.7% monthly growth, while ceramic products rose 16.9%.

China's timber market sees growth in both log and sawnwood imports

Customs data indicates that in November 2025, China's combined imports of logs and sawnwood reached 4.70 million cubic meters, representing a slight year-on-year increase of 0.5% and a 12.3% month-on-month growth. In terms of import value, November imports amounted to $914 million, up 1.9% year-on-year and 12.4% month-on-month. Both import volume and value achieved growth on both a yearly and monthly basis.

Specifically, log imports for November totaled 2.85 million cubic meters, marking a slight 0.2% year-on-year increase but a substantial 27.4% surge compared to October. The import value decreased by 9.9% year-on-year but soared 36% month-on-month. The average unit price for log imports in November fell by 10.1% year-on-year.

Sawnwood imports, however, decreased by 4.9% month-on-month to 1.86 million cubic meters, with a modest 1% year-on-year increase. The import value dipped slightly by 0.8% month-on-month but grew 13.3% year-on-year. The average unit price for sawnwood imports in November rose by 12.1% year-on-year, marking five consecutive months of increase.

Hainan Free Trade Port launches island-wide special customs operations

On December 18, 2025, the Hainan Free Trade Port officially initiated island-wide special customs operations. This implements a new regulatory system characterized by "relaxed first-line controls, managed second-line controls, and free flow within the island," marking another milestone in China's opening-up.

Following the implementation, the range of "zero-tariff" goods expanded from 1,900 tariff lines to 6,600, covering 74% of all goods tariff lines. This virtually covers all timber raw materials, processing equipment, and auxiliary materials. This means tariffs on imports of logs and sawnwood from major timber-producing regions like Southeast Asia and Africa will be eliminated, directly saving enterprises 20%-30% in procurement costs compared to the current 5%-10% tariff levels. This is particularly beneficial for the import and processing of high-end precious woods.

When "zero-tariff" goods enter Chinese mainland from Hainan via the "second-line," relevant import duties must be paid according to regulations. However, goods processed in Hainan with added value reaching 30% or more are exempt from tariffs.