VCN - The complicated development of the Covid-19 pandemic has had a strong impact on the wood processing and wood export industry. It is expected that in the worst scenario, export turnover in the last months of 2021 will continue to decline as the pandemic is not effectively controlled. The whole year's exports will reach about US$12.69 billion instead of about US$15 billion as per the initial target.
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Exports fell sharply
A report titled "The impact of the Covid-19 pandemic on the wood industry: Situation in the first 8 months of the year and scenarios for the last months of 2021" has just been released by a research team from Forest Trends and several Vietnamese timber associations.
Recently, the implementation of social distancing to control the Covid-19 pandemic has severely affected major wood processing centers such as Binh Duong, Dong Nai, Ho Chi Minh City, and Binh Dinh. Breaking the supply chain, decreasing orders, cutting labor, downsizing or closing factories are the response measures currently being applied by enterprises.
Tran Le Huy, Vice President and General Secretary of Forest Products Association of Binh Dinh (FPA), said: “According to reports, many enterprises try to maintain production at 20-50% compared to the time before social distancing in order to partially meet customer requirements and maintain jobs for employees.”
Based on the wood export data of the General Department of Customs, the calculation of the research team shows that in general, in the first seven months of the year, when social distancing measures had little effect on production, most export markets have grown positively. Accumulated in seven months, export turnover increased by 54% compared to the same period in 2020. Major markets all recorded strong export growth, such as the US increased by more than 77%; China increased by nearly 25%; the EU increased by 34%; Canada increased by nearly 49%; and Australia increased by nearly 26% compared to the same period in 2020.
However, social distancing measures narrow the production and business activities of enterprises in the wood industry. The export turnover of July 2021 reached nearly US$1.3 billion, down by 17.3% compared to the export turnover of June 2021. Export value fell deeply in most markets. Specifically, in the US, the export value in July 2021 decreased by 20.3% compared to June 2021; the Chinese market decreased by 23.4%; the EU decreased by 19.7%. In addition, it is worth noting that the number of enterprises directly participating in export also decreased, down from 2,119 enterprises in June 2021 to 2,006 enterprises in July 2021.
To Xuan Phuc, an expert from Forest Trends, said: “The pandemic has negatively impacted all production and business activities of enterprises in the industry. The social distancing measures disrupted the supply chain, and many businesses had to downsize production. Some businesses with COVID-19 cases had to close completely."
A quick survey in Ho Chi Minh City, Binh Duong and Dong Nai by the Handicraft and Wood Industry Association of Ho Chi Minh City (HAWA), the Binh Duong Furniture Association (BIFA) and the Handicraft and Wood Industry Association of Dong Nai (DOWA) for 265 member enterprises, by the end of August 18, 2021, 142 of 265 enterprises stopped production (accounting for 54%); 123 of 265 enterprises reduced capacity due to the application of "3 in one spot" model (accounting for 46%). The total number of employees still working in 265 enterprises is 15,113 (accounting for 13%).
Both scenarios forecast a decrease in turnover
Regarding the export market, the Import and Export Department (Ministry of Industry and Trade) assessed that the export prospects of wood and wood products from now until the end of the year are quite positive, because the main export markets such as the US and the EU countries are in the process of recovering from the Covid-19 pandemic. The demand for wooden furniture will increase to meet the strong construction demand in these markets. However, the situation of the Covid-19 pandemic is developing unpredictably in the domestic market, causing production and export activities of enterprises to stall. This will hinder the growth of the wood industry in the future.
Based on reported numbers and market analysis, the joint research team from Forest Trends and several Vietnamese timber associations have proposed two scenarios for wood export growth in the last months of 2021.
In the first scenario, Tran Le Huy analyzed: Export turnover in the third quarter of 2021 continued to decline as it is now, but export turnover in the fourth quarter of 2021 begin to recover. However, the recovery cannot be equivalent to the turnover compared to the first and second quarter of 2021 (before social distancing), but only about 70% of the average turnover of these two quarters. "If these assumptions are correct, the total export turnover of the wood industry in 2021 will reach about US$13.55 billion," said Tran Le Huy.
In the second scenario, the research team supposes that export turnover in the last months of 2021 will continue to decline as the pandemic is not effectively controlled, the decline in export turnover will continue until the end of the fourth quarter of 2021 with the export turnover of the fourth quarter of 2021 only equivalent to 70% of the export turnover of the third quarter of 2021. If this assumption happens, the export turnover of the whole industry in 2021 will reach about US$12.69 billion.
It is easy to see that in both scenarios, the wood export turnover for the whole year will decrease significantly compared to the initial target of about US$15 billion.
To Xuan Phuc said that it is important for businesses to apply strict risk control measures to maintain production and business activities, retain customers, create jobs for employees, and avoid completely breaking orders, causing risks on the product output market in the future. In addition, businesses need to be ready to resume production and business with high intensity and efficiency when the pandemic is under control.
By Thanh Nguyen/ Kieu Oanh