AFRICA is emerging as a big supplier of wood and wood products to India after the recent constraint in supply from traditional suppliers like Myanmar, Laos, Vietnam etc and Gabon is one of the most promising countries in African continent. Gabon Special Economic Zone (GSEZ) SA, a joint venture of Republic of Gabon, Olam International, Singapore and African Finance Corporation, has developed at a cost of USD 400 Million a timber focused multiproduct SEZ over an area of 1126 Ha at Nkok, around 20 km away from the capital city of Libreville and this SEZ is providing an excellent platform to those willing to establish wood processing facility in Africa. We are presenting our telephonic interaction with Mr Jasveer Singh, Chief Executive Officer, Nkok SEZ to our readers.
Q:- We congratulate you for the success of your SEZ at Nkok, Gabon. From our earlier interactions, we understand that around 123 companies have already signed for establishing their base in your SEZ. With around 56 units being in wood processing segment, do you foresee scope of more such wood processing units in your SEZ or Gabon given all of these would be dependent on one single raw material i.e. timber?
A:- Gabon are processing1.4 million cbm of wood annually while the country has the annual potential to sustainably harvest about 3.4 million cbm round logs. With long term sustainability of operations in mind, there is still a scope for another 120- 150 more wood processing units to settle in our SEZ or within Gabon. Moreover, the species and quality of wood required by Veneer units, saw mills, furniture manufacturers and flooring companies is different so they are not competing with each other for the raw material. GSEZ SA as part of their business facilitation mandate, started a log supply chain (by sourcing logs from third parties) at the beginning of year 2017 to facilitate the availability of raw material to all wood processing units in the SEZ. In 2018 we expect to supply about 800,000 cbm round logs to SEZ industries.
forest resources, there is no doubt that the cheap raw material i.e. timber is available in Gabon. However, transport Infrastructure and logistics has generally been a challenge and constraint in all African countries. How you are ensuring the units settling in SEZ do not face shortage of raw material on this account?
Q:- Gabon has far better transport infrastructure than most of its peers in Africa. Government has made huge investment in last five years to further improve the transport infrastructure. As part of Gabon’s economic growth strategy, the Government of Gabon has been looking to accelerate the development of transport infrastructure in recent years as a means to improve national logistics competitiveness.
A:- For this reason, public spending on transportation has averaged FCFA 780 bn (€1.2bn) per year, or 70% of the state investment budget between 2010 and 2015. Gabon’s transport network currently includes over 10,500 km road, 670 km of Transgabonais Railway line and 3000 km of navigable inland waterways. Therefore, transport infrastructure is not a constraint in Gabon. However, the shortage of rolling stock and trucking fleet in Gabonis accepted and precisely, to overcome this logistics constraint, GSEZ SA is investing approx. USD 70 Million in development of five railway sidings along the Transgabonais Railway line and buy four railway engines, 200 wagons and 120 trucks to ensure smooth transportation of logs from forest to these five railway sidings and further from these railway sidings to the SEZ factories. To ensure adequate supply of logs at these five railway sidings, GSEZ SA has tied up with reputed logging/forest harvesting companies which operate forest concession of 3 million hectares in cumulative basis. We believe that the availability of such logistic infrastructure will not only ensure required supply of raw material i.e. logs to units in the SEZ but will gradually bring down the price of raw material even though the demand will increase.
Q:- As you told earlier that GSEZ SA is also operating the logs upply chain by sourcing logs from third party to facilitate the availability of raw material to all wood processing units in the SEZ? But, are there any plans to ensure the easy availability of logs around the year including the rainy seasons and at a fair price?
A:- Gabon’s rainy season extends from March to April and then from October until mid of December and the availability of logs during this period goes down since the logs harvested in the forest cannot be evacuated in heavy rains. In order to ensure availability of logs around the year including the rainy seasons, GSEZ SA has developed a well-equipped log yard over 30 hectares at the railway siding within the SEZ. This log yard inside SEZ and close to the factories will allow handling of 2 million cbm of logs per annum and steady supply round the year. The other logging/forest harvesting/ trading companies will be also be able to rent space in this log yard to do direct trading of logs with the wood processing units in the SEZ ensuring fair market competition.
Q:- We trust with your initiatives in improving the logistics, the raw material will be available round the year to all current and future wood processing units in the SEZ. Now, can you please let us know your plans to reduce the logistics cost for finished products for units in SEZ?
A:- The logistics entity of GSEZ SA is currently operating 84 flatbed trucks which has resolved the problem of availability of trucks to transport finished good containers to port. Currently, all units in production are using the road / trucks for transportation of finished goods containers to port. With the improvement being done at railway siding in the SEZ and deployment of newly purchased rolling stock, there would be a modal shift from road to rail and cost of inland transportation for finished goods containers will eventually go down. Further to add to this, SEZ also has barging facility with a capacity to handle two barges of 750 tons capacity simultaneously and this directly connects to Owendo port through waterways. New Owendo International Port developed by GSEZ has new and better handling equipment which will ensure efficient turnaround, gradually translating into savings in logistics cost.
Q:- We have heard about the frequent custom strikes in Gabon which has led to delays in transit time for containers. How you intend to deal with such crucial aspect impacting the timely shipment of containers?
A:- We have been working closely with Government of Gabon since it is a partner in GSEZ. Even for this issue of frequent custom strikes, we are working in association Government on a strategy to resolve such issues and bring efficiency in custom clearance and port operation so that such delays are minimized.
Q:- As you told earlier that there are 56 wood processing units in the SEZ? Given majority of our readers are from India, they would like to know that how many Indian companies are there among these 56 wood processing units and how has been their experience in term of life and work environment?
A:- 38 out of 56 wood processing units in the SEZ are promoted by Indians or person of Indian origin. Apart from this, there are 6 more units being run by Indians or person of Indian origin in industrial segment of metal recycling, food processing, cement manufacturing etc. Just to give you and your readers about the acceptability of life and work environment here in Gabon among the Indian investors, around 10 have not only established their business base but they have shifted to Gabon with their families.
Q:- With over 90% of plots in the 1st phase being allotted and occupied, Gabon SEZ is already a success story. After acquiring 120 customers, more than 50 operational units and another 24 units under construction, what is next milestone for GSEZ SA?
In 2011 when we launched our SEZ, the investors were very reluctant to invest in Gabon. Today, within a period of 6 years from launch, every investor visiting our SEZ is intending to set up a manufacturing base here because of world class infrastructure in our SEZ, ease of doing business and incentive framework offered by SEZ Act. To accommodate more and more industries in the SEZ, we will soon start the development works for 2nd phase.
With respect to wood processing in SEZ, we intend to bring in efficiency in the raw material utilization. With current industrial profile in SEZ, 35-40% of the wood coming to SEZ for processing is being discarded as waste and we would welcome entrepreneurs who can bring in technology and product with better recovery or can utilize the waste being generated by other wood processing units.
Q:- Since most of our reader will be interested to explore the Gabon and your SEZ, what particular segment of wood processing would you recommend?
A:- Gabon and our SEZ is a perfect destination for all kind of wood processing viz. veneer, plywood, saw mills etc. given the sustainable supply of raw material and variety of species available in Gabon. But, key here would be a technology or product that can bring in better utilization of raw material as told in my previous response. High end and medium furniture manufacturing which can bring efficiency in raw material utilization or reconstituted/engineered wood products like MDF and particle board are few of the good segments where there is a lot of potential and scope.