Prospects of timber industry in 2016

The year 2016 was projected to be a favorable year for domestic and Binh Duong timber industry, as many free trade agreements in which Vietnam is a partner will take effect or be signed. However, there will also be challenges.

Overcoming challenges

Luu Phuoc Loc, Director of M. Trade Co. (Thuan An town) is sharing a common joy of the timber industry. Mr. Loc said, most of timber companies in Binh Duong got big yields in 2015. More than 500 wood companies are operating in Binh Duong. This has shown the diversity in product lines: garden, office, hotels ..., creating a very vibrant market in the southern region.

In 2016 Lunar New Year, Vietnam and Binh Duong's wood industry is waiting for a big opportunity. Photo: Production activities of Kaiser Wood Company (My Phuoc industrial park, Ben Cat town)

A good sign is that Binh Duong timber industry is expanding its market to America, European Union, Middle East... Binh Duong Furniture Association (BIFA) assessed, in 2016, Binh Duong timber industry will have more motivations, when Trans-Pacific Partnership (TPP) will take effect, and ASEAN Economic Community (AEC) will be an open door for Binh Duong timber industry to conquer the world market.

Nevertheless, the wood industry will also come under pressure from rivals right from these playfields. The victory in 2015 was not a guarantee for a future success. But the good thing is that most companies in Binh Duong are actively conquering the global market, in which the modernization and innovation of production technologies has helped provincial wooden products to improve its quality, reduce labor costs, lower price, to be more competitive in the world market.

Expectations in the New Year

Currently, Vietnam is the largest wood exporter of the world. Every year, Vietnam uses over 21 million m3 of wood, including over 7 million m3 of imported raw materials in 2015. Raw materials account for 50-70% value of a wooden product, therefore giving priorities to domestic materials is a method to save costs.

At present, planted wood areas supplying to the whole country’s demands are gathering mainly in North West provinces, and Central Highlands. Thus, although Binh Duong was named as the country’s wood capital, Binh Duong completely depends on domestic and imported raw materials.

However, in 2016, pressures of raw material sources could be lessened. Vietnam Rubber Group is planning to liquidate about 30,000 hectares of old rubber trees. Particularly, Binh Duong has an large area of old rubber trees, thus will have more sources for wood production. Furthermore, the liquidation of old rubber trees will also help Phu Giao, North Tan Uyen, Bau Bang district … to gain more revenues from rubber trees and become specific raw material sources of the province.

Another issue concerned provincial wood companies is technical barriers. When free trade agreements take effect, tariff barriers are removed, non-tariff barriers would be an barrier to wood importers in protecting the domestic market. However, with wide experiences, Binh Duong timber industry is still full of confidence in 2016.

In general, in the 2016 New Year, Vietnam's wood industry is waiting for a big opportunity. All necessary and sufficient conditions for heighten the value of wood exports are converging. 2016 Lunar New Year is a year of the monkey, an animal likes to climb on trees. Thus, 2016 could be a “golden” year of timber industry.

Reported by Phung Hieu – Translated by Ngoc Huynh