Center of Industry and Trade Promotion Quang Tri

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Wood processing firms urged to study export markets’ requirements to expand exports

Exports of wood and wooden products reached US$2.68 billion in the first five months of this year, representing a rise of 2.08 per cent over the same period last year, according to statistics of the Ministry of Industry and Trade.

While Trans-Pacific Partnership (TPP) and EU-Vietnam Free Trade Agreement (EVFTA) were signed and will soon come into effect, Vietnam is having large opportunities to expand exports of wood and wooden products.

However, Vietnam wood exporters are faced with risks related to origin of wood and labour management when exporting to high demanding markets such as the US and European Union (EU).

In addition, lack of knowledge about import markets’ requirements is a major challenge.

 

Accordig to To Xuan Phuc, a member of a joint working group between the Vietnam Chamber of Commerce and Industry and the Vietnam Wood and Forestry Product Assoiation which is in charge of researching Vietnam’s wood processing and export industry, the lack of knowledge on import markets’ requirements means that firms will encounter difficulties, not only risks of losing markets but also legal risks when violating requirements.

More importantly, a firm violating import markets’ requirements will affect the overal image of Vietnam’s wood export industry and deliver negative impacts on exports.

Experts urge wood export firms to study carefully requirements of import markets such as acts on timber trade and legality of timber origins while improving product quality and enhancing competitiveness.

The wood processing and export industry of Vietnam previously had an advantage in low-cost labour while the use of technology was modest. When low-cost labour is no longer an advantage, local wood processing firms are urged to improve productivity through applying technologies in production and improving workers’ skills.

The working group proposed the Government to provide incentives to wood processing firms, such as incentives in import taxes on equipment and training workers.

In addition, wood processing and exporting firms should be active in seeking for new markets and industry associations should promote their roles in supplying information and providing early warnings about risks for firms.

Moving towards US$20 billion goal

The wood exports of Vietnam is expected to hit US$20 billion by 2025.

According to the Vietnam Wood and Forestry Association, in 2000, there were 741 forestry product processing firms in the country, increasing nearly to 4.000 in 2016. Nguyen Quoc Khanh, Chairman of the Handicraft and Wood Industry Association of HCM City (Hawa), said Vietnam has potentials to become the world’s interior producer and the goal of US$20 billion export revenue would be within reach.

Last year, Vietnam exported US$6.9 billion worth of wood products, representing a rise of 10.7 per cent against the previous year, transforming Vietnam into the fourth largest wood exporter in the world, coming after China, Germany and Italy.

Made-in-Vietnam wood products are present in 37 countries and territories in the world with the US being the largest importer with a turnover of US$2.6 billion.

With the positive situation in the US real estate market and the recovery of the European and Japanese markets exports would see good growth this year. Wood exports in 2016 are expected to hit more than US$7 billion. The growing trend is expected to continue.

Experts said that firms should focus on creating wood products with smart and sophisticated designs in order to increase added values and competitiveness.

Source: Vietrade

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