About our work
The EU FLEGT Facility, supported by the Swedish International Development Agency (Sida), works to contribute to poverty eradication and sustainable forest management in Asia through support to the implementation of the EU FLEGT Action Plan.
Forest-sector micro, small and medium enterprises
in the Mekong region
Understanding the situation of micro and small forest products enterprises in the Mekong region in the context of FLEGT Voluntary Partnership Agreements
The Swedish International Development Agency (Sida) is funding the EU FLEGT Facility to:
- Increase knowledge about forest-sector micro, small and medium enterprises (MSMEs) in the Mekong region.
- Identify challenges and test solutions for these timber companies to operate legally and sustainably in the context of FLEGT Voluntary Partnership Agreements (VPAs).
- Analyse the roles, positions and challenges of women in MSMEs in Mekong forest product supply chains and provide opportunities to develop support mechanisms and capacity building that actively support women’s engagement and economic empowerment in the forest sector.
The work is filling critical information gaps by assessing these sectors in Laos, Myanmar, Thailand and Vietnam, paying particular attention to the potential impacts of actions towards improved forest governance and trade in legal timber on women and the livelihood of micro enterprises.
Through small pilots, the European Forest Institute (EFI) is testing methods and approaches to support MSMEs in overcoming challenges that they face in their operations. Solutions tested and lessons learnt from these pilots will contribute to raising technical and operational skills of the MSMEs, promoting formal registration of informal entities, strengthening MSME networks, supporting MSMEs' access to legal timber and participation in policy processes.
The EU FLEGT Facility is working to develop mechanisms that actively support women’s engagement in the Mekong's forest-product value chains by EU FLEGT Facility
Countries across the Mekong region are engaging in processes to negotiate Voluntary Partnership Agreements (VPAs) with the EU to reform their forest sector, address illegal logging and promote trade in legal timber products.
VPAs are among the measures of the EU Forest Law Enforcement, Governance and Trade (FLEGT) Action Plan. Under a VPA, a country makes a commitment to develop a timber legality assurance system. It also commits to export only verified legal timber products of types listed in the VPA to the EU. Most VPA countries expand this commitment to all market processes. To do this, VPA countries must define legality and often need to change their regulatory frameworks.
It has become clear that, in some countries, strictly enforcing the existing regulatory framework could harm small and micro enterprises in the formal sector and smallholders in the informal sector. Unintended social, economic and environmental consequences could be caused by factors that include:
- More stringent enforcement of laws and regulations that do not consider the realities of MSMEs.
- Costs of demonstrating compliance with applicable legality standards
- Modernisation of value chains to meet legality requirements
As a result, implementing a country’s VPA could potentially stifle small-scale businesses and increase rural poverty. If, however, the VPA takes account of the special needs of small enterprises and the informal sector, it could raise understanding, create economic opportunities and alleviate poverty.
A fundamental challenge is the near absence of reliable data on this sector. Very little is known about the number of people involved, material flows and value chains, or current levels of compliance with applicable laws and regulations. There is also little information about the differentiation of gender roles in the region’s micro and small forest products sectors. This makes it difficult to predict how enforcement of existing legal frameworks might affect women.
The EU FLEGT Facility aims to fill these information gaps and help stakeholders to develop solutions.
The reclaimed timber supply chain has for some time been overlooked, but there is significant earning potential for MSMEs that trade in re-purposed wood by EU FLEGT Facility
Following an inception report to frame the scope of work, regulatory assessments of forest and timber-based MSMEs in Laos, Myanmar, Thailand and Vietnam were conducted. Fourteen supply chains producing timber products for domestic and in part for international markets were analysed in the four countries from June 2017 to June 2018.
Information on findings from the assessments is available in the brief “Small and micro-sized entities in the Mekong region’s forest sector: a situational analysis in the FLEGT context” published by the EU FLEGT Facility in June 2019.
Based on the assessments, the Facility selected specific supply chains for pilot interventions that tested solutions to the challenges identified in the supply chains. Six pilots were conducted between 2018 and 2021 in Thailand, Vietnam, Laos and Myanmar.
Information about the SmE work and lessons learnt from the pilots were shared at regional events such as the Regional Training Workshops on Timber Legality Assurance (TLA), APEC EGILAT and other events. The brief Supporting forest- and timber-based MSMEs in the Mekong region to operate legally and sustainably was published in October 2020.
Currently, the EU FLEGT Facility is creating the conditions for upscaling the pilots in the four Mekong countries and continues to document and share lessons learnt from its experience supporting MSMEs.
- Video: Supporting forest-sector MSMEs in the Mekong region
- Brief: Promoting legality within the private forest sector: obstacles and incentives to formalization
- Brief: COVID-19 impacts on wood-based MSMEs in Myanmar
- Brief: Supporting forest- and timber-based MSMEs in the Mekong region to operate legally and sustainably
- Brief: Small and micro-sized entities in the Mekong region’s forest sector: a situational analysis in the FLEGT context
- Summary of supply chain assessments for Laos, Myanmar, Thailand and Vietnam
- Presentation Participation of SmEs in legal and sustainable supply chains given at the TLA7 workshop (November 2019)
- Presentation Supporting wood-based MSMEs in the Mekong region to operate legally and sustainably given at APEC EGILAT (May 2021)
- Information note: Diagnoses and regulatory assessments of small, micro and informal forest-products enterprises in the Mekong Region (English, Thai and Vietnamese)
If a Voluntary Partnership Agreement takes account of the special needs of small enterprises, it can raise understanding, create economic opportunities and alleviate poverty by EU FLEGT Facility
- Legality in the forest sector: New insights into obstacles and incentives for MSME formalisation 03.08.2021
- MSMEs important partner to improve forest governance and reducing deforestation and forest degradation 23.07.2021
- Webinar to explore how support to MSMEs improves forest governance and livelihoods 13.07.2021
- Ghana’s forest management makes strides through Social Responsibility Agreements 14.12.2020
- COVID-19 takes a heavy toll on Myanmar’s wood-based micro and small businesses 14.10.2020
Sida is a government agency working on behalf of the Swedish parliament and government, with the mission to reduce poverty in the world. For more information visit the Sida website: www.sida.se