Malaysia is an ideal country for the cultivation of Agarwood, one of the most valuable trees in the world. Many investors are looking seriously at portfolio diversification into tropical hardwoods and plantation investment. Agarwood is a highly valuable wood which produces a valuable oleoresin, seen as irregular dark patches formed inside old Aquilaria trees. Other common names for Agarwood include eaglewood, aloeswood and gaharu.
Fewer than 8% of trees produce the valuable Agarwood in nature. The locals cut down Agarwood trees indiscriminately in search of the valuable fragrant producing resin. As a result, there are hardly any of these trees left in the world. Since high quality Agarwood takes a long time to form naturally and only a small percentage of trees produce them naturally, it follows that the demand far exceeds the supply.
Agarwood is a highly valued wood and has been used in medicine, perfume, and as incense in Buddhist, Muslims and Hindus religious ceremonies. Its therapeutic property is used as an ingredient in medicine for treating pleurisy, asthma, rheumatism and jaundice. It is also known to be beneficial to the liver, lungs and stomach. Other products include sculptures, beads, boxes, perfume, soaps, shampoos and essential oils. International trading of agarwood is not limited to finished products. Trading also takes place in the form of powder, oil, wood and wood chips. Read about Gaharu Products.
Taiwan is the most important final destination market (www.TRAFFIC.org), followed by United Arab Emirates, Saudi Arabia and Japan. Japan alone has been importing on average 29,433 kg per year, with an average purchase price of USD187/kg. (Source: Ministry of Finance, Customs Statistics).
Many foresters and investors have expressed interest in growing Agarwood but demand still out-strps supply and because this gap will not be resolved in the near future, there is a great opportunity in agarwood plantations investment.
High quality agarwood, which is black and full of oil, can fetch prices of up to hundreds of dollars a kilo and every piece of agarwood is valuable as wood bits and chips can be used to make aromatic incense sticks.
White parts of the wood scraps can also be distilled to make aromatic essential oil, which can be sold at more than US$1,000 per 10 grammes.
The residue from the distillation process is made into special oil used in Muslim religious ceremonies. As a result, most customers come from Middle East nations, while some European countries also need aromatic agarwood oil to make perfume.