Country Profiles

Access to latest commentary on timber industries and economies of EU and VPA partner countries

KEY EU COUNTRY

NETHERLANDS

Last updated on 21 April 2022

General Economic Trend

After shrinking by 3.8% in 2020, due to the COVID pandemic, the Dutch economy recovered and grew by 3.8% in 2021, according to the Netherlands Bureau for Economic Policy Analysis (CBP). Despite the economic contraction, the unemployment rate only increased a little, to 3.8%, in 2020 (3.4% in 2019), and fell again to 3.4% in 2021, according to the IMM 2021 report for the Netherlands.

Purchasing power increased in 2020 (+2.5%) and was expected by the Report to have grown by an additional 0.8% in 2021. However, consumer confidence had shown a large drop to -21 index points in 2020, a similar figure as during the early days of the global financial crisis in 2007/2008. Over the first seven months of 2021, consumer confidence increased again by 9 points to -12. The recovery is attributed by the IMM Netherlands report to high vaccination rates in the Netherlands – varying from 71% to 91% over the different age groups – and the gradual ease of related restrictions on businesses and society.

Corporate investments contracted by -5.4% in 2020 but was also expected to have recovered in 2021.

The IMM Netherlands report states that the Dutch economy has shown great resilience in 2021, bolstered by support measures, continuing low unemployment, and growing household savings during the Pandemic and concludes that the degree of permanent damage is likely to be small. However, inflation was mentioned as a potential risk to dampen recovery and future growth.

Timber Industry

Construction

The housing sector is a key consumer of timber and timber products, especially softwoods. 2020 and 2021 saw a reversal of the positive trend in new homes completions after several years of growth, with the number of newly built houses decreasing by 2.2% in 2020 and 1.6% in 2021. The number of building permits granted had already fallen substantially between 2018 and 2019, meaning that the 2020/2021 slow-down in building is not solely due to the COVID pandemic but also to a lack of suitable construction sites, development capacity at municipalities and private developers, and major issues with nitrous oxygen and polyfluoryl alkyl soil contamination (PFAS) blocking development of thousands of construction sites. The number of building permits increased again by 15.5% and 28.8% in 2020 and 2021 respectively. However, due to uncertainties regarding to the effects of the COVID-19 pandemic, the consequences of the nitrogen emissions and with PFAS contaminated soil, there is large uncertainty surrounding the predictions for housing construction in the Netherlands in the coming years.

Hardwood industry

Despite the COVID pandemic, actors within the Dutch market for tropical hardwoods were positive about the medium-term market development in 2021, according to the IMM Netherlands report. Productivity within the construction sector is recovering and showing a tendency to grow. The DIY and gardening sector has benefitted significantly from the fact that people spent more time at home and in their gardens due to the COVID restrictions.

According to the Report, supply rather than demand has been the limiting factor with regards to market development, with delays in shipments and high freight costs limiting supply in 2021. As business with South America and Asia was affected by supply bottlenecks, in particular, the Report expects a stronger shift towards Africa in 2022.

The market for temperate hardwoods is also expected to benefit from the recovery of the construction sector and the housing market. However, as they tend to be used for interior fittings and furniture, which are bought at the end of the construction cycle, there is a delay compared to tropical timber used in construction, states the Report. European oak has remained the most popular temperate hardwood species also in 2021. Supplies of temperate hardwoods, especially oak, were also described as limited, which led to significant price increases in 2021.

Retail

After initial uncertainty and sales losses during the first COVID lockdown in early 2020, the Retail sector began to feel positive impacts from the COVID pandemic. Sales of home improvement and decorative products grew sharply as people stayed at home much more than before the COVID outbreak.

Furniture stores reported a combined increase in turnover by 7% and DIY stores by 18% in 2020. This was followed by a slight decline in 2021. However, turnover remained above 2019 levels last year.

Tropical Timber Imports & Trade

The Netherlands is a major importer and trader of tropical timber in the EU. Overall, Dutch imports of timber and timber products (HS44, 47,48 and 94) from tropical countries increased by 43% to $1,514bn in 2021 (2020: $ 1,062bn), according to data provided by the IMM-sponsored Sustainable Timber Information Exchange (https://www.stix.global). 2021 imports also exceeded pre-COVID imports of $1,251bn in 2019 by more than 20%.

According to the IMM Netherland report, the Dutch market for tropical hardwoods can be subdivided into two submarkets: 1) the construction sector, including DIY and gardening and 2) the market for waterworks (civil engineering). Dutch IMM 2021 EU trade survey respondents operating in the first submarket were positive about their mid-term prospects; their major challenge currently relates to difficulties in timber supply and delivery times. Although competition with other building materials remains fierce, timber seems to be recovering market share. This would be partly due to growing environmental awareness among consumers and architects and the need for LCA-based innovation in the housing sector.

Demand for (tropical) timber in civil engineering (and water works), increased sharply in 2020. At that time, contracting of public tenders was brought forward, partly due to COVID and related measures to bolster the economy. However, sales in this sub-sector have declined again since the end of 2020.

Key suppliers of tropical timber and timber products to the Dutch market included Brazil (mainly pulp and some sawn wood, plywood, and furniture), Indonesia (mainly furniture, joinery, mouldings, plywood), Malaysia (mainly sawn wood and joinery), India (mainly furniture), and Viet Nam (mainly furniture), with India overtaking Viet Nam as fourth most important supplier in 2021. When pulp is excluded from the product mix, Indonesia is the most important supplier by far and Brazil comes out in fifth place. India has established itself as a direct competitor to Indonesia in the furniture sector over the last few years, with furniture deliveries to the Netherlands almost tripling between 2016 ($33m) and 2021 ($93m).

Among the African countries, from where the Netherlands source primarily sawn timber, plywood and veneer, Gabon, Cameroon and Congo Republic are the most important suppliers. Overall, Dutch tropical timber imports from Africa have decreased significantly over the last few years.

Dutch respondents to the IMM EU trade surveys in 2020 and 2021 observed a recovery of the overall timber market, including tropical timber and timber products. Compared to 2019, sales growth rates of up to 10% were common, traders in DIY products (including gardening/outdoor) even mentioned growth rates up to 30%. Apart from the COVID-19 effect, a frequently mentioned reason for this was the significant shift in the promotion of timber – including tropical timber – as a renewable material with a high score in carbon-neutral development and circular economy.

The positive overall sentiment in the sector was dampened a little in 2021 by severe delays in deliveries and record freight rates for shipments from tropical regions.

Trade with VPA Partner Countries

Overview

VPA partner countries accounted for tropical timber and timber product (HS44, 47,48 and 94) deliveries to the Netherlands worth $664m in 2021, up from $538.5m in 2020. VPA partner countries thus accounted for half of the Netherlands tropical timber product imports in 2020 and a little less than half in 2021. Trade with four of what were the five most important suppliers among the VPA partner countries in 2020 – Indonesia, Malaysia, Viet Nam and Gabon – recovered from the COVID-related dip in 2020 with sometimes significant growth in deliveries in 2021. The one exception was Cameroon, from where Dutch imports continued to decline in 2021.

 

Hover over the chart to see exact data

Netherlands – VPA partner country trade January-December 2021 (in €)
Source: IMM Data Dashboard

Indonesia remained the largest VPA-partner supplier in 2021 ($358.4m) and significantly extended its lead over the second most important supplier, Malaysia ($136.3m) last year. Viet Nam, the third most important supplier among the VPA partner countries, achieved some growth in exports to the Netherlands in 2021 (to $111.3m) but the rate of growth was much slower than for Indonesia.

Gabon ($18.9m in 2021) is the only African country among the 5 key supplier countries to the Dutch market in 2021. Thailand ($14.9m) rose to fifth place last year, as Dutch imports from Cameroon ($10.4m) continued to decline in 2021.
Furniture (other furniture $152.5m and furniture seats $85.8) accounts for around one-third of the Netherlands timber and timber product imports from VPA partner countries. Both furniture assortments showed strong growth in the Netherlands last year.

Other important products include joinery ($138.5m), imports of which increased sharply in 2021 and sawn wood ($93.4m), deliveries of which were largely flat. Imports of wood mouldings from VPA partner countries also showed significant growth last year (to $73.3m).

When it comes to sawn wood, joinery and mouldings, the Netherlands imports a large variety of tropical species. Those most commonly cited in the IMM Netherlands survey comprise meranti (the lead Dutch tropical import), azobé, merbau, bangkirai, sapele, ayous/obeche, teak, camaru, kapur, okoumé, keruing and iroko. Mentioned less often are tali, sipo, wenge, mengkulang, greenheart, purpleheart, mahogany, garapa, fraké and okan.

Hover over the chart to see exact data

Netherlands – top 5 VPA partner trade 2020-2021
(3 month rolling averages; HS44, HS47, HS48, and HS94 products) 
Source: IMM Data Dashboard

Hover over the chart to see exact data

Netherlands – top 5 VPA partner trade 2020-2021
(HS44, HS47, HS48, and HS94 products)

Source: IMM Data Dashboard

Trade with Top 5 VPA Partners

Indonesia

After the start of FLEGT Licensing in November 2016, Dutch imports of timber and timber products from Indonesia increased steadily from $198 million in 2016, to $231 million (2017), $258 million (2018) and $324 million in 2019. In 2020, imports then fell again to $277 million, before reaching a new record level of $358.4m in 2021.

Growth was driven by “other” furniture, furniture seats, and joinery which showed some volatility between 2018 and 2021 but are clearly booming overall. Imports of plywood and wood mouldings also increased again in 2021.
Some Dutch respondents to the IMM 2021 EU trade survey mentioned a shift in trading patterns, favouring Indonesian FLEGT-licensed timber over competing products from Malaysia.

Hover over the chart to see exact data

Netherlands – Indonesia trade of top 5 wood products since 2019
(3 month rolling averages; HS44, HS47, HS48, and HS94 products)
Source: IMM Data Dashboard

Hover over the chart to see exact data

Netherlands – Indonesia trade 2020 – 2021
(HS44, HS47, HS48, and HS94 products)
Source: IMM Data Dashboard

Malaysia

The Netherland’s trade with Malaysia, its second most important supplier among the VPA partner countries, was rather volatile in recent years, falling in 2017 (to $121 million), before rising in 2018 ($136 million) and then slipping again in 2019 ($120 million) and 2020 ($118 million). There was some recovery, to $136m in 2021, but the rate of growth was much lower than in deliveries from Indonesia, for example.

Sawn wood and joinery remained the main product groups imported from Malaysia and continued to grow in importance last year; together these two product groups accounted for more than 80% of total 2021 imports, after around 70% in 2020. Imports of mouldings and furniture were largely flat at a low level in 2021.

According to some Dutch respondents to the IMM 2021 EU trade survey, Malaysia lost some market share to Indonesian in 2021 and the green lane advantage provided by FLEGT-licensing was quoted as a reason for this trend.

Hover over the chart to see exact data

Netherlands – Malaysia trade of top 5 wood products since 2019
(3 month rolling averages; HS44, HS47, HS48, and HS94 products)
Source: IMM Data Dashboard

Hover over the chart to see exact data

Netherlands – Malaysia trade 2020-2021
(HS44, HS47, HS48, and HS94 products)
Source: IMM Data Dashboard

Viet Nam

In 2021, Dutch imports of timber products from Viet Nam grew mainly due to a sharp rise in deliveries of seating furniture and some growth in exports of “other furniture”, which is the most important product group exported to the Netherlands by far.
Imports of the other relevant product categories – “other wood”, paper, and joinery – were largely flat.

Hover over the chart to see exact data

Netherlands – Viet Nam trade of top 5 wood products since 2019
(3 month rolling averages; HS44, HS47, HS48, and HS94 products)
Source: IMM Data Dashboard

Hover over the chart to see exact data

Netherlands – Viet Nam trade 2020-2021
(HS44, HS47, HS48, and HS94 products)
Source: IMM Data Dashboard

Gabon

Gabon is the only remaining African country among the Netherland’s top five VPA partner suppliers. Trade between Gabon and the Netherlands has been rather volatile over the last five years; significant growth in both 2020 and 2021 followed on steep decline between 2017 and 2019.

In 2021, imports stood at $16m, which were comprised primarily of plywood and veneer.

Dutch sawnwood imports from Gabon remained close to zero in 2020.

Dutch imports from Cameroon, which was the most important African trading partner in 2019 and, despite steep decline still in 2020, plummeted to just $10.4m in 2021.

Hover over the chart to see exact data

Netherlands – Gabon trade of top 5 wood products since 2019
(3 month rolling averages; HS44, HS47, HS48, and HS94 products)
Source: IMM Data Dashboard

Hover over the chart to see exact data

Netherlands – Gabon trade 2020-2021
(3 month rolling averages; HS44, HS47, HS48, and HS94 products)
Source: IMM Data Dashboard

Thailand

Thailand replaced Cameroon as the fifth most important VPA supplier for the Netherlands, with imports totalling $14.9m, up from $13.8m in 2020. Like the other Asian VPA partner countries, Thailand focusses on exporting processed wood products, primarily furniture, paper products as well as small quantities of tableware, joinery and marquetry to the Dutch market.

Hover over the chart to see exact data

Netherlands – Thailand trade of top 5 wood products since 2019
(3 month rolling averages; HS44, HS47, HS48, and HS94 products)
Source: IMM Data Dashboard

Hover over the chart to see exact data

Netherlands – Thailand trade 2020-2021
(HS44 and HS94 products)
Source: IMM Data Dashboard

Perception of FLEGT

Trade perceptions and awareness of FLEGT

Awareness of the FLEGT VPA process in the Netherlands improved significantly in 2021 over 2020, according to the latest IMM survey. 76% of survey respondents indicated that they felt “fully aware”, compared to 43% in 2020. The proportion of “partially aware” respondents fell to 29% and no respondent in either year felt “totally unaware”.

At the same time, however, the proportion of survey respondents who agreed fully or partially that FLEGT-licenses were making importing wood from Indonesia easier, at 72%, were lower than average among the key EU countries (82%) in 2021 and lower than in the Netherlands in 2020 (84%). The same is true for rating of the administrative process, which only 67% of respondents in the Netherlands found “easily manageable and understandable”, compared to an average of 74% throughout the IMM EU key countries.

The 2021 IMM EU trade survey also highlighted some room for improvement on communication and handling of FLEGT-licensed timber imports, with only 45% (key country average: 54%) of Dutch respondents agreeing fully or partially that FLEGT-licensing teething issues, such as HS code mismatches, had been largely resolved. As in 2020, most unsatisfied respondents among all key countries in terms of authorities’ dealing with Licence issues were based in Netherlands and in Belgium.

On the survey question ‘FLEGT only means legal and has nothing to offer in terms of sustainability’, with 22% (2020: 58%) a much lower proportion of respondents than in 2020, agreed and only 22% (2020: 26%) partially agreed. This is an interesting development as most other key countries were showing an opposite trend, with respondent tending to show less rather than growing faith in the sustainability credentials of FLEGT-licensing. And it is particularly interesting as the Dutch market is usually showing a strong preference for voluntary third-party certification. 61% or respondents still stated that they would give preference to FSC or PEFC certified over FLEGT-licensed timber in 2021, compared to 79% in 2020.

How aware are you of the FLEGT VPA process and what it involves? (n=21)

%

Fully aware

%

Partially aware

%

Totally unaware