VPA/FLEGT: A breakthrough in timber exports to the EU?

Joining the VPA/FLEGT Agreement, Viet Nam is more professional, open, transparent and in line with international conventions and standards. Picture: ST

Export doubled

Mr. Pham Van Dien, Deputy Director General of the Forestry Department (the MARD), commented that the VPA FLEGT Agreement has created a great position for Vietnam to join the global timber market and value chain. Participating in the Agreement, Vietnam’s manner has been more professional, open, transparent and consistent with international conventions and standards. This is the key factor in the value of the wood industry in the future.

Besides, when joining this Agreement, Vietnam also has the opportunity to apply high technology into the processing industry, making wood products more beautiful with higher value. For example, the normal finished wood prices are only $US 1,400-1,800/ m3, but if applied high technology, the prices may be at $US 4,000/ m3. Finally, the VPA/FLEGT Agreement gives the Vietnamese timber industry a very large market, with no fear of price pressure.

Giving more detailed analysis of the potential for wood export growth in the EU through the VPA/FLEGT Agreement, Mr. Nguyen Ton Quyen, Vice President and Secretary General of Vietnam Timber and Forest Products Association, said: the domestic and international furniture market has grown strongly, Vietnam has risen to become the world's fifth largest and Asia’s largest export country of wood and forest products. Vietnam's furniture is sold in 120 countries and territories in the world with the main markets being the USA, China, Japan and the EU.

With the EU alone, this is considered a very important market for Vietnamese wood. It is easy to see that the signing of the VPA/FLEGT Agreement will help wood products to be exported directly into 28 European countries without going through any intermediary country. “I predict that in the next few years, wood exports to the EU will double, from $US 700 million to more than $US 1 billion.” More importantly, the VPA/FLEGT Agreement will help Vietnam improve its institutional structure on forest management, illegal exploitation and trade, contributing to the sustainable development of wood processing industry,” Mr. Quyen emphasized.

Enterprises proactively professionalize

According to some experts, although creating many opportunities for the exports of wood to the EU market, the VPA/FLEGT Agreement also poses many challenges for the wood processing industry. When this Agreement comes into force, it will affect all enterprises, including non-exporters, because the Agreement requires and clearly promotes the transparency of the raw materials. This is the only thing that exporters have to pay attention to. This requires enterprises to produce with more transparency and comply with the requirements of the Agreement.

Relating to the difficulties and challenges posed by the VPA/FLEGT Agreement, Mr. Nguyen Ton Quyen said that, for VPA/FLEGT, 100% of timber exported to the EU must be legal timber. Despite the use of wood raw materials in the country or for imports, enterprises still have to ensure full records, papers to prove the legality of wood.

As such, enterprises must carry out many steps to ensure clear traceability of wood, increasing costs. However, Mr. Quyen also affirmed: “This is an inevitable demand of the world market. In the United States, for example, the Lacey Act is the same as the VPA/FLEGT’s Wood Declaration. Therefore, in order to maintain the export market, enterprises themselves must professionalize in all stages of the production process, raising awareness for leaders and workers to strictly implement the requirements,” said Mr. Quyen.

In order to take advantage of the opportunity which is created by the VPA/FLEGT Agreement, Mr. Pham Van Dien said, “We have to act, in fact, have acted for a long time. A series of work such as improving the legal system, absorbing opinions both of the country and abroad for mutual benefit. In terms of support to farmers, each locality has different ways of doing things, as long as it is to promote the planting and production of sustainable development. For the imported wood, we have imported from Cambodia, South Africa, Cameroon, but have decreased significantly. Imports of wood from Cambodia also decreased by 3-4 times.

About the issue of promoting production, the export of wood in general and export to the EU market in particular, Mr. Ha Sy Dong- Member of the Finance-Budget Committee of the National Assembly, Deputy Head of the National Assembly delegation Quang Tri said: at the 5th session meeting in 2017, the National Assembly passed the Forest Law, which entered into force on January 1, 2019. It can be confirmed that, this is a legal corridor to help the sector to develop higher, which is the basis for better state management of forest protection.

However, Vietnam should also recognize the challenges and opportunities of integrating into the world forestry sector. "In the coming time, we expect the MARD to further clarify the policy of land allocation, contracting with the head of households; at the same time, help the forest owners to have a Certificate of Forest Stewardship Council (FSC) to better manage and enhance the exploitation and production from the forest; encourage cooperatives to work together to build certificates based on the joint ventures,” Mr. Dong said.