Changing the market, exporting wood is facing big challenge

Exports of wood and timber products have maintained a steady growth by around 10-15% per year. Photo: Nguyen Thanh

Protection policy from the United States

Report on "Vietnam Import and Export of Timber and Wood Products: Situation and Trends of Sustainable Development" written by Forest Trends Organization, Vietnam Timber and Forest Product Association (VIFORES), the Forest Products Association of Binh Dinh, the Handicraft and Wood Industry Association of Ho Chi Minh City (HAWA) was launched at a conference in the same name as a report on 27/3 in Hanoi. It showed that the wood processing and export sector will face some difficulties due to changes in export markets, especially in 4 most important markets of Vietnam including: US, China, Korea and Japan in the future.

Specifically, in the US market, President Trump's trade policy is moving towards reducing trade deficits, protecting trade, and encouraging domestic production. This policy has a direct impact on China, the country with the largest trade surplus from the United States. Recently, there has been a steady increase in the investment in the Vietnam wood industry of Chinese enterprises .

This move could be seen as a move to avoid US tariffs on Chinese exports to the United States. Increasing China's investment in wood processing in Vietnam may also be the reaction of Chinese enterprises to China's increasingly stringent environmental policy toward domestic industries.

Regarding the above problems, Mr. To Xuan Phuc, Forest Trend analyzed that: the increasing in China's investment in Vietnam's timber industry implies risks to the Vietnamese timber industry. The US consumes about 20% of Vietnam's total exports. Vietnam has become a major US concern, particularly for exports such as electronics, apparel, footwear and furniture.

Particularly for furniture, Vietnam's trade surplus with the United States reached over $ 2 billion VND. This surplus plus the flow of investment from China into Vietnam's wood processing industry could create special concerns from US regulators. "This requires the Vietnamese timber industry and regulators to take appropriate steps to minimize the changes in exports to the US market," Mr. Phuc said.

Strengthen control of legality

Besides the United States, there are policy changes from the Chinese, Korean, and Japanese markets, mainly related to legal control of timber. It will also place the processing industry and exporting wood to face significant challenges.

The report stated that China is a very open market for Vietnam's wood products. Vietnam's trade surplus of wood products from this market is over $ 600 million VND per year. However, Vietnam's exports to the Chinese market are mainly raw products such as wood chips, round logs / rough hills and sawn timber.

Mr. To Xuan Phuc said that China is considering applying a step-wise policy to control the legality of timber resources used in this country. Currently, the Chinese government has adopted the only legal timber law that is used in public agencies.

For Japan, the Japanese government issued the Clean Wood Act, which came into effect in May 2017. At present, the Government of Japan is issuing documents guiding the application of this Act.

Regarding the story of wood usage, the Government of Korea has also enacted the Act on the Sustainable Use of Wood, which officially came into force in March 2018.

According to Mr. Phuc: "The performance of these laws could also have the same meaning as being the application of measures to strictly control imports of wood products into their market. That will affect Vietnam's export of wood products to these markets in the future. "

At the workshop, some delegates said that Vietnam's wood processing and export industry is still on the rise. In recent years, growth has been driven by both export expansion and deepening, with increasing share of value-added products and decreasing of raw materials.

The growth of the wood processing industry is closely linked to the domestic supply of wood and domestic consumption. This means that for the timber processing and export industry to develop sustainably in the future, there should be national and enterprise-level strategies in balancing the supply and demand of raw materials from import sources, domestic and export exploitation, balance between domestic market and export market, balance between different production lines of the industry ...