COVID-19 production suspension hampering timber exports

Vietnam's timber and wood products raked in 9.6 billion USD in the first seven months of this year, up 55 percent year on year. (Photo: congthuong.vn)

Suspension of production at local wood processing enterprises due to the COVID-19 pandemic is having effects on exports, according to the Vietnam Timber and Forest Product Association (VIFOREST).

Many enterprises processing and exporting furniture and handicrafts under the Ho Chi Minh City Fine Arts and Woodworking Association (HAWA) had received orders from foreign importers until the end of 2021, said the association Vice Chairman Nguyen Chanh Phuong.

Nguyen Van Sang, director of the Viet Products Import-Export Joint Stock Company (Viet Products), said that the company had a number of new customers in the US market, leading to an increase in export orders in 2021 of 30 percent year on year.

This year, the Duc Thanh Wood Joint Stock Company, a large producer of wooden home products and children toys, had set an export target of 17 million USD, an increase of 15 percent year on year. However, by the end of February it had completed nearly 50 percent of its goal, said Nguyen Thi Ngoc Diep, the company's deputy general director.

The pandemic had made people in other countries stay at home and had a greater need to shop for home products, said Diep, adding that supply chains from China had broken so the customers had moved to Vietnam.

In addition, some large buyers had increased orders for Vietnamese enterprises due to good product quality, she said.

However, the pandemic has caused wood processing and export enterprises to face stagnation in production and delivery because 65 percent of workers in this industry have been laid off due to the pandemic, according to VIFOREST.

The southern key region had 265 wood processing enterprises with a total of 119,300 employees before applying social distancing. However, only 141 enterprises are now in operation, with 30,700 employees.

HCM City, Dong Nai, Binh Duong and Tay Ninh have had 134 wood processing enterprises suspend production due to having COVID-19 cases or being unable to implement the “3 on-site” model, which involves on-site production, dining and rest.

Businesses implementing the model have high costs due to the COVID-19 testing of thousands of employees.

Meanwhile, during the production process, enterprises still have to import materials, auxiliary materials, chemicals, packaging, and other necessities and also implement import and export procedures at banks, customs and seaports. Their staff face a very high risk of COVID-19 infection, the association said.

Therefore, VIFOREST has proposed that the Government allows the association and the businesses to buy COVID-19 vaccines and give free vaccinations to workers.

In addition, it said the Government needed to give financial support to wood processing businesses. The support includes reduction or delay in paying corporate income tax and other kinds of taxes, delay of social insurance payments, and land rent exemption for this year.

The Government also should allow enterprises to extend loan dues and restructure debts, it said.

The association has requested the Ministry of Industry and Trade to add raw material of the wood processing industry to the list of essential goods to avoid difficulty in transporting raw material for production.

According to the Ministry of Agriculture and Rural Development, Vietnam exported 10.3 billion USD of timber, wood and forest products in the first seven months, a year-on-year increase of 55 percent.

Of the figure, timber and wood products raked in 9.6 billion USD, up 55 percent on the same period of last year.

The major export markets of Vietnam's wood and forest products in the first seven months included the US, Japan, China, the EU and the Republic of Korea, accounting for over 90 percent of the total export value.

The largest export market was the US with 5 billion USD, up nearly 94 percent year on year. Other large markets were China, 814 million USD, up 27 percent; Japan, 704 million USD, up 17.2 percent; and the RoK, 453 million USD, up 12.8 percent.

Vietnam surpassed China as the largest supplier of bedroom furniture to the US. The export value of bedroom furniture to the US reached 991.4 million USD, up 69.8 percent year on year.

Meanwhile, the export of Vietnam’s wood to France and wider Europe has ample room for growth.

Vietnam is currently the sixth largest provider of wooden furniture in France, but only makes up 4.5 percent of the European nation’s total import values.

Experts forecast that Vietnam’s timber and wood products exports to Europe would surge in the latter half of 2021. By that time, COVID-19 is expected to be brought under control and European countries are projected to loosen restriction measures and facilitate trade flows.

The recovery of the European economy and the European Union – Vietnam Free Trade Agreement will be the driving forces for Vietnam's export of timber and wood products to this market./.