Timber industry gets opportunities from CPTPP

The Comprehensive Partnership and Transpacific Progressive Partnership (CPTPP) signed by 11 countries (including Vietnam) on 8 Mar 2018, is expected to help textile, seafood, timber industry in the country have more advantages for export market expansion. In fact, the domestic timber industry is beginning to benefit from this agreement.

 Wood production at Lam Viet Company.  

 Potential of new markets

Besides maintaining traditional markets such as the US, European Union..., wood enterprises of Binh Duong are also expanding export markets. According to experts, Vietnamese timber enterprises have more export opportunities to Australia, due to geographical advantages and FTAs. Apart from the ASEAN-Australia-New Zealand FTA, CPTPP will open the gateway for domestic wood products to enter this potential market.

Experts said that decisive factors for customers in Australia to buy a wood product were quality, design, and price. In the first 6 months of this year, Australia imported more than $70 million of wood and wood products from Vietnam. According to Binh Duong Furniture Association (BIFA), the potential in this market has not been exploited by domestic wood enterprises. Wood enterprises need to improve product design to fit aesthetic values and tastes of Australian consumer.

In addition, the remaining members and its market of the CPTPP are opening the door for Vietnam's timber products, including demanding markets such as Japan and Canada. The biggest barrier now is the high tax rate (around 12%, depending on the type of wood products). But according to plan, export tax rate to CPTPP markets will decrease to 0%. In the opposite direction, import tax on materials from member countries will also decrease; timber industry of Binh Duong in particular and the country in general will have more supply channels of raw materials.

In addition, when the CPTPP is effective, the tax rate reduction will have a good impact on the import of machinery and equipment for wood enterprises to modernize their production line.

Changing to utilize good opportunities

According to experts, in Southeast Asia, countries exporting wood are starting to make changes in business strategy. Some countries, like Thailand, Malaysia..., instead of boosting exports, they focus on increasing productivity. In these countries, productivity is defined as the return earned per unit of labor or capital that is the most important measure of success of any industry.

Recently, BIFA members are making positive changes in improving their productivity. Many companies do not hesitate to invest in technology, modern production lines from EU. In addition, high-quality human resource also concerns enterprises. According to Nguyen Liem, Director of Lam Viet Wood Joint Stock Company, manpower is not only competitive in the wood industry, but also in danger of losing laborers to electronics and garment industry. Therefore, technology upgrading and human resource retaining are the attention of businesses.

Many experts said that enterprises have to learn themselves, take the initiative. It is important for enterprises to thoroughly understand the CPTPP, and then popularize this among all staffs. At the same time, enterprises must have good strategies for each customer group, each field; approach new markets such as Chile, Peru, and Canada to learn about their policies and procedures so that benefits of all parties could be balanced.

According to BIFA, to reach CPTPP markets, production, management, and marketing of enterprises also need to change. Timber enterprises in Binh Duong have actively participated in many trade fairs of wood industry organized by CPTPP members. In addition, changes in appearance, flexible product sizes, and reasonable prices for each market are regularly carried out by wood enterprises in the province to accelerate exports, dominate new market when the time comes.

Reported by Xuan Vi – Translated by Ngoc Huynh