Construction and timber: reactivating building to boost regional industry

By Ignacio Vera Izquierdo, general manager of Forestal Santa Blanca

In the economic debate over the paralysis of construction and the search for engines to reactivate investment, attention tends to focus on large real estate developers or on aggregate macroeconomic figures. However, there is a critical link that experiences this crisis on a daily basis in the regions: the network of sawmills and the medium-sized timber industry, which supplies the domestic market and the local hardware store network.

When construction comes to a halt, the impact immediately spreads in a domino effect toward the demand for essential inputs such as dimensioned, planed, and impregnated timber, indispensable for partitioning, finishes, and housing structures. For medium-sized sawmills and SMEs in the sector—far removed from the dynamics of large pulp-exporting corporations—the slowdown in building directly compromises operational continuity, hardware store dynamism, and thousands of industrial jobs in the central-southern zone of Chile.

Faced with this scenario, the timber industry is closely watching the support measures for construction: FOGAES guarantees expanded up to 6,000 UF for new homes, a temporary VAT exemption, and facilities for mortgage credit. Beyond their immediate effect on real estate sales, these tools are an essential lever for reactivating the timber value chain and protecting the regional productive fabric.

These policies could be complemented by initiatives that more decisively integrate timber into the housing and infrastructure agenda. One alternative would be for MINVU to incorporate a minimum proportion of timber components in certain housing projects, thereby boosting an industry whose productive chain is already established in the country, without needing to apply extraordinary tariffs to substitute materials. Likewise, it would be advisable to establish incentives to expand the use of solutions such as laminated beams and timber engineering systems, which have already demonstrated their potential in various types of infrastructure and buildings.

In this context, it is essential to link short-term urgencies with the future projection of the forest heritage. The challenge is especially relevant for small and medium-sized landowners: according to CORMA, the forest area has decreased from 2.4 to 2.1 million hectares, and of the approximately 80,000 hectares of registered reforestation, only around 1,800 correspond to new plantations. Furthermore, many landowners lack the resources to recover land affected by fires, which reinforces the need for subsidies, incentives, and support mechanisms.

Replicating regional reforestation promotion initiatives—such as the model driven in Biobío under the leadership of regional governor Sergio Giacaman—and integrating them into key discussions like the Budget Law is a fundamental signal to ensure the availability of raw material in the coming decades. The Regional Government of Biobío committed $9.8 billion to a program executed by CONAF to recover 4,000 hectares affected by fires, benefit 450 families of small and medium-sized landowners, and generate at least 5,000 jobs in 36 months. The experience demonstrates how regional governments can complement a national forest promotion policy with instruments adapted to the productive reality of each territory.

Moving in this direction would make it possible to connect the reactivation of construction with a long-term policy for the forest industry: stimulating demand for domestic timber today while, at the same time, ensuring the recovery and renewal of the resource that must supply that demand in the future. Thus, the boost to building can become a tool to strengthen forest SMEs, energize regional economies, and position sustainable timber as a cornerstone of sustainable and industrialized construction in Chile.