The Teak Log Business in Burma (Myanmar)

The export of log is technically banned for the private companies through the normal trade channel . However , any foreign companies can acquire log of any species from the state - owned Java Timber Enterprise ( popularly known as JTE ) . JTE sells all stocks of logs under the Monthly Auction.

Major End Users and Trading Companies participate at this monthly auction . Any interested companies can buy the log by participating the monthly auction . Another way is that we can buy from those , who has earlier won the auction . One may argue that the price will be higher in such a case . Generally , it might be true . However , we can buy at the price of negotiation so as easy to calculate at the right moment whether it is profitable or not , irrespective of the fact that the original buyer can make the money or not . Sometimes , the original buyer has to sell at the lesser price due to the abrupt changes of the international markets . It is therefore advisable to buy the logs in either of the both ways :

1. Direct Purchase
If we have the regular demand for the long term business , we have to participate the monthly auction .

2. Indirect Purchase
If we have to supply for the small quantity for such an irregular requirement , we had better go into between the winner of the previous auction and the second buyer .

For the both cases, we can offer our service . Under the simple way of thinking everyone will say that the price of the direct purchase will be less However , there are certain regulation , to which we may underestimate its burden and complexity . For example,

First - We have to deposit the Bid Bond ( Earnest Money from 1500 USD to 15000 USD ) It is not returnable if the buyer cannot open L/C in time after the tender is awarded.

Second - In case we won , we have to open the Red Clause L/C , which mean that 75%of the L/C amount will be taken out by JTE prior shipment term can not be furnished by even some international banks .

Third - After winning , the cargo can be stored for two month without any extra Charge.(If we cannot arrange the shipment in this prescribed duration of two months, the penalty for over-due storage will cost 10 USD/HT/Month)

Therefore, it is not recommendable to the new buyer to buy the log under the Direct Purchase. Another factor to consider is what kind of Grade and Specification are required. . For Teak Log if the requirement is for Sawing Quality Grade 4 and the better, we must buy under The Direct Purchase. For lesser quality and smaller specification, we have to buy under The Indirect Purchase. In addition, there are another two Modes of Inspection: Selected Purchase and Lot Purchase. Under Selected Purchase, we can choose Pcs (log) by Pcs (log), and under Lot Purchase, we have to choose Lot by Lot, which contain 50 Pcs(Logs) or 100 Pcs(Logs) or other definite number. For easy understanding, the following Diagram can be shown!

System Direct Purchase Indirect Purchase
Inspection Lot Purchase Selected Purchase
Lot Purchase
Quality Range I
Special
One Star
Two Star
Sawing Quality G-1
Sawing Quality G-2
Sawing Quality G-3
Range II
Assorted Over Girth 5'
Assorted Girth of 4' to 4'-11"
Assorted Girth of 3' to 3'-11"
Assorted Quality M
Assorted Quality MX
Assorted Quality mx

Note - The Grading of M, MX and mx is based on quality, not on specification. The average girth is 5-5.5 FT and the minimum is 4 Ft.

The price of Range 1 starts from 1000 USD/HT FOB to 3500 and over and the availability of quantity is also restricted. The price of Range 2 is 1000 USD/HT maximum downwards to 800 USD/HT.

Regarding payment in general, the buyer has to open an Irrevocable L/C in favor of a Branch Company outside Burma.

Regarding specification, the basic dimension measured are Girth and Length and Hoppus Tons which is equal to 50 Cubic Foot. The applied formula is:

Hoppus Ton = [ (G/4) x (G/4) x (L)] divided by 50 Cubic-Foot
Note - G= Girth in Foot and L=Length in foot.

For the quantitative description in Cubic Meter and CM for Diameter, the conversion can be made and thus, we cannot guarantee the correctness and exactness of diameter. The ITTO(International Tropical Timber Organization) accept 1 Hoppus Ton = 1.8027 CBM (Cubic Meter).

 
 
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