USAID Facilitates Investment into Cambodia’s First Sustainable Plantation, Grandis Timber
BANGKOK, April 29, 2020 – The United States Agency for International Development (USAID), through its Green Invest Asia project, successfully facilitated an equity investment by international financial institutions into Grandis Timber, Cambodia’s first and only Forest Stewardship Council (FSC)-certified plantation. The buyer, a leading Cambodian commercial reforestation company, has pledged to retain the plantation’s FSC certification and status as a leading example of sustainable forestry in Cambodia.
Grandis Timber grows high-quality, ethical furniture-grade timber on 3,700 hectares of formerly degraded land in Kampong Speu Province. At maturity, its trees – mostly teak – are expected to store almost 1 million metric tons of carbon dioxide equivalent. Grandis Timber’s focus on sustainability also translates into supporting communities in and around its concession, building access roads and educational facilities and supporting sustainable energy through sales of biomass to local garment factories.
“Grandis Timber provides a rare example of sustainable timber and carbon storage in an emerging economy,” said Christy Owen, the head of USAID Green Invest Asia, which is a USAID-funded technical assistance platform in Southeast Asia facilitating investments into low-carbon agriculture and forestry companies.
Most FSC-certified forests are in higher-income countries. Cambodia has among the world’s highest rates of deforestation; sustainable alternatives are needed to reduce pressure on natural forests and prevent deforestation from continuing at similar or greater rates in the future.
USAID Green Invest Asia supported Grandis Timber’s acquisition with environmental and social performance analysis and investor identification, while advising the investment group and its lender on deal financing and structuring. The platform also facilitated the sale of sustainable timber to garment factories, further boosting its overall investment attractiveness.
“Delivering responsible and sustainable projects in forestry and agriculture in Cambodia is far from straightforward, and as our operations expand, we hope to collaborate again with USAID Green Invest Asia as a partner that understands these challenges,” said a senior representative from Grandis Timber.
“The Grandis Timber investment sets a precedent for sustainable forestry finance, proving the business case for sustainable timber sourcing in Cambodia – and beyond,” said Owen.
Outcry against widespread deforestation, government logging restrictions, and corporate procurement policies increasingly tip the scales toward sustainable forestry in Asia. Yet, less than 6 percent of FSC-certified forests are located in Asia while growing incomes and economies, as well as the need for building materials and biofuel, steadily increase the demand for wood–a trend that is expected to continue.