"Myanmar’s forest and timber sector has been central to the country’s economy and society, particularly over the last century. Myanmar’s forests contain some of the most valued species in the world—particularly rosewood, ironwood, and teak. Myanmar also has one of the most longstanding forest management systems in the tropics. Today, despite reduced timber extraction revenues, wood industry still generates over 8 percent of formal government revenues. Beyond timber, rural society largely depends on non-timber forest products (NTFPs) and agroforestry for food, medicine, and wood fuel, which is by far the most important energy source in rural Myanmar, with between 60 percent and 80 percent of communities relying on this source. Some of Myanmar’s forests also form some of the world’s most critically important biodiversity ‘hotspots’. The importance of Myanmar’s forests is not limited to their wood products alone: • Forest governance and the peace process are directly intertwined: Two-thirds of Myanmar’s remaining forested areas are managed by ethnic groups, in many cases through customary tenure systems, with much of this forest located in conflict areas. It is evident that inclusive forest governance and natural resource management and empowering local agents will contribute to the national peace-building process and reduce conflict. • Community forestry (CF) and smallholder plantations are financially and socially viable and can meaningfully contribute to rural income generation, provided the appropriate institutions, rights, incentives, and technical support are in place. Community-based forestry programs represent international best practice, providing tenure to communities to stimulate investments and creating trust, income, and business opportunities. • Wood processing can enhance exports and rural jobs creation. Myanmar currently loses economic value from limited or wasteful low-quality timber processing of some of the world’s most valuable timber. Looking to other countries in the region, Vietnam invested heavily in high value-added processing and forest small and medium enterprises (SMEs) over the last 10 years, and today is the fifth largest exporter of wood products with revenue exceeding that of Myanmar more than twentyfold in value. The looming global supply gap for wood products will most likely boost this sector even more in the future. • At the same time, forests and mangroves provide significant ecosystem services for water catchment, habitat for flora and fauna, carbon storage, soil nutrient recovery, and increasingly important disaster risk protection. With accelerating climate change, forests’ role in both mitigation and, more crucially, adaptation will be increasingly essential (improving basin-level hydrological functions, especially maintaining moisture recycling and rainfall and reducing droughts and floods), especially for downstream/lowland populations. In the years before the democratic transition, forest areas were largely over-logged to maximize timber revenues with little consideration for sustainability, which resulted in widespread degradation of the Permanent Forest Estate (PFE). Illegal logging and corrupt practices are still ongoing, but in 2014, a log export ban (alongside other policy measures) was imposed to stop the plundering of production forests. Since then, the forest and timber sector is undergoing a series of reforms to better control and manage the resources in a more socially inclusive and transparent way. Although the current direction is positive, and there is high political ownership by the government and society, progress is still slow..."