Brighter color for the wood industry

In 2017, the wood industry of Binh Duong in particular and the country in general had a successful year, export value increased, market was expanded. 2018 is expected to continue to have many development opportunities for the wood industry.

Advantage from FTAs

Vietnam's wood industry exported to more than 100 countries and territories around the world. Regarding raw material market, there are about 70 countries and territories supplying raw materials to domestic wood processing enterprises. According to Binh Duong Furniture Association (BIFA), product input and output for Binh Duong wood industry are plentiful, stable in both export market and raw material import market. It can be said that in 2018 there would be many advantages for this industry to continue to develop and expand market share. Most prominently, bilateral free trade agreements (FTAs) have been signed with other countries will help the domestic timber industry to grow.

Wood production at Lam Viet Wood Joint Stock Company.

For example, when the European Union (EU) - Vietnam Free Trade Agreement (EVFTA) comes into force, most handicrafts and furniture exported from Vietnam to this market will be entitled to the tax rate of 0%. This tax rate is applicable to processed wood and wood products (3% effective before EVFTA), bamboo or rattan furniture (5.6% effective before EVFTA), wooden boards (4% effective before EVFTA), wooden decorations (3% effective before EVFTA).

In recent years, Binh Duong's timber businesses have been supported by Vietnam Chamber of Commerce and Industry (VCCI) - Ho Chi Minh City to build a 5s model to improve quality and productivity. Besides, the wood enterprises themselves have also invested in modern equipment to increase the competitiveness in the export market.

The problem of material source

It can be seen, fluctuations in raw material prices, especially rubber wood, in 2017 created many difficulties to wooden enterprises in Binh Duong. In 2018, enterprises will have to stock up sufficient raw materials to satisfy their orders. At the "Autumn meeting" of wood enterprises in Binh Duong, Ho Chi Minh City and Dong Nai, many strategic issues of development in the future were discussed by business leaders. The most important issue of the wood industry was the raw material and the linkage between businesses.

Luu Phuoc Loc, Director of Mtrade Wood Company, said that the EU was helping Vietnam develop legal certification at material growing zones in the northern and central provinces. This is meaningful, as the EU market only accepts wood products originating from clean materials. However, the development of afforestation for domestic timber production still faces many difficulties, as the planted forest area is still small compared with the actual demand. In the long run, timber industry still has to import raw materials. Therefore, the maintenance of raw material price is in need of support from all levels and sectors.

Leader of Tuong Van Wood Company shared, production capacity of domestic enterprises still had certain gaps. But whether large enterprises or small businesses, the linkage must be properly concerned to mobilize the overall strength of the industry. Assignment of production, specialization of each stage will help businesses operate more professionally, save time and costs.

According to BIFA, the trend of order sharing, processing some steps is being applied by member companies with large orders. Meanwhile, many small enterprises are processing orders from large enterprises. It can be said that this trend has helped small businesses have "jobs", increase revenue, while large businesses have more time to study, design more new models, access more markets.

Economist Dinh The Hien said, Binh Duong's wood industry had contributed significantly to export turnover of the province. The introduction of a specialized industrial zone for wood industry demonstrates the province's interest in local strengths. In the coming time, Binh Duong's timber industry will continue growing stably. However, in order to maintain this development pace, it is necessary to have more preferential policies to attract investments and develop wood materials. If we could make breakthrough in the supporting industry, Binh Duong's wood industry would have a solid foundation to enhance competitiveness to further expand market, increase export value of wood products.

Reported by Xuan Vi – Translated by Ngoc Huynh