Domestic Timber: Need policy as lever?

	Wood, timber product exports to hit US$8 billion
	The exports of wood and timber products into the EU will reach $US 1 billion.
	The timber industry is going down now

To become more professional, and enhance competitiveness, enterprises and carpentry villages need more support policies.

Consumption of US $ 2-3 billion

Reviewing the potential of domestic timber market, Mr. Nguyen Ton Quyen, Vice President and General Secretary of Vietnam Timber and Forest Product Association (Vifores), said that the demand for timber in the Vietnamese market was very high. Total value of domestic wooden products was about US $ 2-3 billion per year. Working with the Ministry of Construction, Vifores noted that each year, the area of ​​new housing construction was about 70-80 million m2. To provide for this, the volume of timber used would be about 2-3 million m3. Wood is required for construction for scaffolding, formwork, and wood associated with kitchen cabinets, flooring, and stairs ... In addition, there is demand for other furniture such as, furniture used in the households, furniture for schools, health, sports, education. " No matter how much we import wood into Vietnam, we consume it all. Then, there is no reason for not developing domestic furniture to exploit every potential’ Mr. Quyen emphasized.

According to the reporter, now if we compare the market share of Vietnamese wooden products with that of imported products from foreign markets, Vietnamese wooden products still dominate by expanding to meet the demand of people from urban to rural areas. In 2017, the total value of domestic consumption of wooden products is nearly US $ 2 billion, of which foreign products account for US $ 200-300 million. However, it is noteworthy that Vietnamese products, despite their larger market share, are less competitive than imported products. This is reflected in some points: Poor materials, mostly secondary materials, affecting quality and design. In addition, although the quality and design of domestic products are not as good as imported products, its price is even higher than that of imported products.

Create strength for the carpentry village

According to some experts, in order to develop the domestic wooden market, there are two directions, in which, one way is to urge exporters to invest more in the domestic market and promote the development of businesses and Vietnamese carpentry villages. However, about the first direction, Mr. Quyen said that it was very unworkable. "Exporters do not want to return to the domestic market because manufacturing for exported products are different from domestic products. Exporters often have to be professional. For example, with outdoor furniture export, the technology is specialized in outdoor furniture, the main material is acacia wood and it is quite simple. However, if you return to invest in domestic furniture, with diversified items such as timber for construction, handicrafts, sports, office etc, enterprises have to change technology, production premises, worker training… The problem is not simple", Mr. Quyen said.

Thus, in order to develop the domestic timber products, we need to focus on enhancing the competitiveness for businesses and production villages for domestic consumption. Since opening up to now, the State has encouraged exports, so, many enterprises mainly focus on exports. Exporters are have enjoyed advantages on policies, especially Tax policy. Enterprises which import or export wooden products, they also enjoyed a tax rate of 0%. The partners and export markets are also relatively stable. For example, Nam Dinh Forest Production Joint Stock Company (NAFOCO) signs only an export contract with its foreign partner with value of US$ 50 million. The foreign enterprises provides to the domestic exporters about models, prices, quantities as well as full information on markets. Therefore, the domestic enterprise produce and export products quite conveniently. Contrary to the incentive for exports, currently, enterprises, especially the domestic carpentry villages, are insufficient in many conditions to develop” Quyen said.

The timber industry is going down now (VCO) - The weakness in product design is significantly reducing the competitiveness and profitability of timber industry. ...

Some experts said that in order to develop domestic furniture, the State needs to develop orientation for the sustainable development of carpentry villages. Every year, while there is orientation for processing, export wooden products, there is no document orientated on domestic wooden products. In terms of mechanism, policies, we also certainly need to amend and support, especially in the Tax field. In addition, the important point is that the State should have policies to guide and encourage the development of distribution channels and agents, etc.

Regarding this issue, Mr. Quyen added: "For human resources, the difficulties that need to be solved are production premises, access to bank capital so that businesses and villages can buy raw materials and technology. If the State issues clear guidance documents, then the ministries and sectors shall provide specific policies. It is believed that the carpentry villages will develop strongly and the domestic wooden products will increase their competitiveness.”