Absolute forest cover of 50%, excellent forest growth potential, favourable geographical position and low transport costs have enabled this sector to have a significant presence on the foreign market.
The quality raw material base consists of coniferous and deciduous trees, and the capacities of the wood industry are located in the wider area of the Republic of Srpska and are represented in almost every municipality.
The main areas of the wood industry are: processing of wood and wood products and furniture production.
About 600 economic entities operate in the wood processing industry, which indicates the great potential of this branch of industry, and also shows significant opportunities for various forms of cooperation with foreign partners and great opportunities for foreign investment. A number of companies in this sector are interconnected in several clusters, such as the cluster of wood industry and furniture industry Drvo Prijedor, which is included in the regional network of clusters in Southeast Europe and Drvo cluster Banja Luka.
This branch is also supported by the institutions of the Republic of Srpska through the conclusion of contracts for the supply of raw materials for wood processors for a longer period of time, delayed payment of raw materials and granting discounts in case of advance payment of raw materials.
Existing companies in the Republic of Srpska in the field of wood industry show interest in cooperation in order to transfer new technologies, improve design and connect with foreign markets, and to brand domestic products.
There is also the possibility of investing in companies that have not completed the privatisation process, as well as companies in bankruptcy.
In addition to this type of partnership, there is a need for the production of raw materials for the needs of the wood industry. Namely, 60% of companies import some of the raw materials such as: MDF boards, natural veneer, plywood, edging strips, paints, varnishes, fittings, sandpaper, abrasive brushes, etc.
The potential of this industry has also been recognized by large international companies such as IKEA.