English

Abstract of thesis presented to the Senate of Universiti Putra Malaysia in fulfilment of the requirement for the degree of Master of Science

MODELING AND FORECASTING OF PRIMARY TIMBER-BASED INDUSTRY IN PENINSULAR MALAYSIA

By

NORAIDA ABD WAHOB

November and 2014

Chairman: Dr. Abdul Rahim Abdul Samad

Faculty: Economics and Management

Malaysia is one of the major producing countries in global timber market. The Malaysian Government has put priority to the implementation of Sustainable Forest Management (SFM) practices. Recognizing the need to strengthen the SFM practices, Malaysia has undertaken a critical step to reduce the Annual Allowable Cutting (AAC) and has imposed stringent criteria on timber harvesting operations. As a result, this policy implementation has influenced the volume of timber that can be extracted from the natural forests which has and simultaneously affected the timber processing industry in Peninsular Malaysia.

Hence, impact analysis of SFM practices on timber-based industries in Peninsular Malaysia is needed. This study analyses various timber-based commodities such as sawn timber, veneer and plywood and those representing the first stage of timber-based processing industry. The data used are were annual time series from 1980 until 2012 which are obtained from three major resources namely; the Statistics Forestry Department Peninsular Malaysia, the Malaysian Timber Industry Board Resource Center and the World Bank.

The analysis of each commodity uses 4 models; specifically, the supply model, domestic demand model, import demand model and export demand model. The Augmented Distribution Lagged (ARDL) is employed in order to get the goodness of fit for each commodity model. This model provides short run and long run coefficients which are being used for impact analysis. Based on the supply model of the sawn timber, the results show that harvested area is statistically significant at 5% level. The domestic price of plywood is...