Forest Service’s A-game to green Silk Road

The Korea Forest Service, the state-run afforestation agency, on Thursday called for more Korean corporate investment into the forestation business in foreign countries. 

Forests take up about 31 percent of the world’s land, yielding raw material, energy resources, food and feeds, according to recent data from the Food and Agriculture Organization. The FAO estimates that the demand for wood will more than double by 2050 from present, along with the growth of the world population, income and demand for bioenergy.

For more than 20 years, the KFS has fueled the state-supported overseas investment to the forestation in forest-rich countries worldwide. The agency’s three-pronged efforts ―policy revision, experience and network ― has given Korea a tighter grip on the vital resource outside its territory, pioneering the “green Silk Road” for the rich fruits of the manmade forests.

“The global demand and price for wood is constantly growing, while the supply is becoming weak,” the KFS said, adding that the demand for wood will continue to hike in China, India and the emerging Asian economies in the next 20 to 30 years.

“It is crucial that the state and nonstate corporate entities work closely to expand long-term overseas investments in forest plantation ― it has both a noble cause and promising outlook,” the KFS said.

The KFS sees long-term investment in overseas forest plantation as a must. Korea’s speedy economic development after the Korean War owed much to the cheap and ample supply of lumber from the Indonesian woods, it said.

As of 1992, Korea’s sufficiency rate for wood was still as low as 5 percent, rendering the peninsular country highly dependable on imports from Southeast Asia and Australia. In 2010, the rate grew to about 17.4 percent, still far below the domestic demand for the resource.

Meanwhile, the price of imported wood continued to hike steeply. The material’s price soared from $79 per square meter in 2003 to $275 in 2013, creating a harsher environment for Korean manufacturers.

In this context, the Korean government has acknowledged the historical weight of forestry in the country’s economic development. Under the current law, the overseas forestation business is subject to the same regulations as the domestic agricultural, fishery livestock businesses. A revised bill, dubbed the “international agricultural development cooperation act,” was drafted by the Agriculture Ministry and the KFS and is about to be tabled at the National Assembly.

The revision includes deregulating the staffing requirements of the investors and abolishing the compulsory request for a state approval to set up foreign operations of the forestation business. The bill also demands launching a large-scale state-led overseas forestation council and adding three more forest experts to this pending organization.

If the revision passes the congress, it will redefine the country’s forestation business on the global level and invigorate the industry.

Endorsing active international cooperation on resource diplomacy, Korea has forged bilateral ties with a total of 29 foreign nations throughout Asia, Australia, Europe, Central and Latin America and Africa.

The Korean government’s support for overseas forestation stems from the fact that the country’s forest business needs cooperation and support from the local governments, especially in the forestation business in the Southeast Asia. The bulk of Korea’s overseas forestation business, 81 percent, is launched in Vietnam, Indonesia and other Southeast Asian nations ― with the KFS’ cooperative partnerships with these governments providing a firm milestone for the Korean investors.

Korea’s first invested in overseas development forest resources in the late 1960s, when state-run Korea Development Company and pulp manufacturer Donghwa, now Korindo Group, invested in the lumber business in Indonesia.

As of late 2013, 31 Korean companies were investing in the forest plantation business in 31 foreign countries, turning 314,000 hectares of land into lush forests, according to KFS data. In the same period, 94 companies submitted 109 business plans to seek the KFS’ final approval for overseas forestation investment.

In 1993, the country launched a long-term goal of fostering 1 million hectares of forest in foreign countries. In the same year, it started its first overseas plantation, a eucalyptus forest in western Australia.

The foreign plantation portfolio consists mostly of the production of industrial materials, palm oil and bio fuels. Investors are also eyeing the investment for afforestation and reforestation project as a U.N.-endorsed clean development mechanism business.

“The overseas forestation business is closely related to the political, legal, cultural agendas of the partner countries,” a KFS official said. The forest agency said the lumber resources must be safely secured in the foreign lands, to keep the domestic supply stable and safe.

“The private companies are the major bricks of Korea’s green Silk Road, accompanied and protected by the KFS and the state authorities,” he added. 

By Chung Joo-won (joowonc@heraldcorp.com)