What waiting for Vietnamese wood exports?

VCN - Closing a year of great success, Vietnam's wood processing and export industry has entered 2020 with opportunities but also challenges. Wanting to maintain momentum of growth, ensuring sustainable development, investing in improving the value chain instead of focusing only on the manufacturing sector is a core requirement to implementing.
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what waiting for vietnamese wood exports

In 2020, the forestry industry aims to export US$12.5 billion. Photo: Nguyen Thanh

Many opportunities

Assessing opportunities open to the wood industry in 2020, the Vietnam Administration of Forestry (MARD) says that Vietnam's wooden furniture export turnover only accounts for 6 percent of the US$150 billion in the global wood furniture trade. Enterprises can expand and develop their export market share.

According to Pham Van Dien, Deputy Director General of Vietnam Administration of Forestry, a voluntary partnership agreement between Vietnam and the European Union for the implementation of the Law on Forestry, Forest Governance and Forest Trade (VPA/FLEGT), effective from June 1, 2019, will open up opportunities for Vietnam when exporting to the EU. In addition, in the US, demand for wood products from countries, including Vietnam, may increase to compensate for goods shortage due to high taxes from the Chinese market.

One of the favourable factors that cannot be ignored is that Vietnam has ratified and is implementing a roadmap of a series of free trade agreements (FTAs) such as the Comprehensive and Progressive Trans-Pacific Partnership; Vietnam-EU; Vietnam-ASEAN; Vietnam - Japan; Vietnam - Chile; Vietnam - Korea; Vietnam-China; and Vietnam-Thailand. This helps import tax of many products of the countries in the agreement to be reduced or eliminated, creating a competitive advantage for Vietnam's export goods. These are good opportunities for Vietnamese wood enterprises to reach the world market.

However, the General Department of Forestry also acknowledges the whole industry has faced many challenges in 2020. Namely, the risk of businesses being sued for dumping and subsidies is increasing. In addition, businesses in some localities like Dong Nai and Binh Duong have difficulties in recruiting skilled workers and finding places to build factories to expand production due to competition with other industries. Building links between production, processing and exporting enterprises and forest growers to create initiative in the supply of raw materials and improving the quality of plantation timber is still limited, leading to the loss of early plantation timber, small timber, and low quality. In addition, another important factor is the underdeveloped supporting industry, which mainly has to import at high costs, so the price of products is not competitive.

Invest and perfect the value chain

In 2020, the industry aims to strive for an export value of forest products of US$12.5 billion, up 10 percent compared to 2019. Of which: Wooden products are $8.68 billion; wood $2.99 billion; NTFP is $0.83 billion. Regarding the export market, the US is still the largest pillar with $6.1 billion, up 15 percent; followed by Japan with $1.52 billion, up 10 percent; EU $1.13 billion, up 10 percent; China $1.21 billion, up 5 percent...

Deputy Minister of Agriculture and Rural Development Ha Cong Tuan asked the industry to focus on addressing the market associated with the management of chain production, improving the quality of intensive seed varieties to convert timber from small timber plantations to large timber for processing domestically as well as export. According to Deputy Minister Ha Cong Tuan, attention also should be paid to mechanisms and policies to develop non-timber forest products, forest environmental services, payment and improvement of infrastructure policies and mechanisms to create advantages for the environment and not only administrative reform, but also the conditions of infrastructure for people and businesses to develop.

Regarding a longer-term vision, VNFOREST said that in the medium term, the orientation is to expand investment in completing the value chain from production - design - trade to brand. Currently, most of the value of Vietnam's forest product processing industry is still in the manufacturing sector. To reach the export target in 2020 as well as the figure of $20 billion by 2025, the industry cannot continue to rely solely on production value. In a wood product, raw materials and manufacturing account for only 30 percent of the value, the remaining 70 percent are of design value. Nice product design, the higher the price. The world market has gone through price competition, now the quality and inevitable future is design competition in the direction of increasing personalisation. Therefore, design and trade, brand plays a vital role to create competitiveness for Vietnam's wood and furniture processing industry in the future.

In the long term, according to VNFOREST, centralised production area planning is an important factor. Distribution of production and processing areas of the wood and furniture industry is now concentrated mainly in localities with traditional strengths: Binh Duong, Dong Nai, Long An, TayNinh and Binh Dinh. In these areas, it is necessary to focus on exploiting the core production advantages, focusing on the model of concentrated production areas to make the most of the region's resources and support from related industries. In addition, it is necessary to take advantage of Ho Chi Minh City and Hanoi, which are major trade and service centres of the country, to focus on developing soft values such as design, trade bridges, fairs, training and technology transfer.

By Thanh Nguyen/ HuuTuc

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