Wood factory plans stall

  • 2008-08-20
  • By Adam Mullett

WOODEN WALL: The government has refused to give VMG the guarantees it wanted.

VILNIUS - Lithuania's Vakaru Medienos Grupe (VMG) has locked horns with the Directorate General of State Forests over its plans to build a new fiberboard and cellular furniture factory in Alytus, the daily Lietuvos Rytas reports. The plant is a joint venture with Sweden's Ikea.
VMG has asked the government for certain concessions, including guarantees of long-term timber supplies from state forests to its planned factory. The Lithuanian state forests directorate refused to provide such guarantees, saying that it doubts there will be enough timber to supply the factory's needs without importing material from abroad.

"We estimated the demand for timber for several years to come. As far as I know, there will not be a sufficient supply of the type of timber VMG will need in the future," Benjaminas Sakalauskas, head of the state forests directorate, was quoted as saying.
Donatas Dudutis, head of the forestry department at the Ministry of Environment, said that all companies must abide by the same rules set by the government.
"We have informed them that there is a shortage of the roundwood that is suitable for production of furtniture," Dudutis said. "They wanted some exceptional supplies with exceptional prices, but all trade of roundwood must be by the rules," he added.

Kestutis Murauskas of the Ministry of Economy said that for large investments, the only way to change the rules is to strike a deal with the government. "If you want to make a big project you need to talk with the government, or play by the same rules as everybody else," he said.
Marauskas hinted at support for the venture, saying that if the product is good, then it should be allowed. "If there is a new factory with new technology that can be sold all over the world, then I think it's a good thing," he said.

The investors have warned that they will build their factory in Latvia or Belarus if their request is denied. A group of members of the Lithuanian parliament have thrown their support behind the project, but the government does not seem to be inclined to grant the company's requests.
Dudutis said that the government welcomes new investment and factories but will not be granting any exceptions to the rules.

According to Dudutis, environmental concerns were not an issue in the construction of the wood plant. "These issues are separate and not related to the trade rules," Dudutis said.
Ikea refused to go on record for The Baltic Times because it is their policy not to comment on suppliers. Ikea currently has its own supplier of wood, Swedwood.

As The Baltic Times went to press, VMG representatives had declined to comment until further notice.