Wood industry must speed up

In 2015, export turnover of the whole country’s wood industry reached $6.9 billion. The year 2016 is considered as an important turning point to this industry to conquer the exports goal of $10 billion exports in the coming period.

AEC is encroaching on the domestic market

Before ASEAN Economic Community (AEC) takes effect, the national timber industry has been under a great pressure, as big corporations of Malaysia, Thailand... are gradually controlling the  domestic market. Index Interfurn Corporation (Thailand) has opened their first wooden product retail store under franchise model in HCMC with an area of ​​over 7.000m2. In the coming time, this corporation will open five more wooden product supermarkets in HCMC, Hanoi and Da Nang. The attack on Vietnamese wood market from Thai businesses demonstrated an ambition to gain market share right at our home market.

Timber industry needs to quickly solve the raw material resource problem. Photo: Production activities of Kim Thanh Company (Thuan An town)

Leaders of HCMC Association of Handicraft and Wood Processing assessed, in wooden furniture sector, Thailand and Malaysia have many advantages to penetrate deeply Vietnamese market, because many enterprises of the two countries are having production facilities in Vietnam. Besides, the decrease of international transportation costs is also an advantage to the two countries to conquer Vietnamese market. Meanwhile, most of Vietnamese timber enterprises are small- and medium-sized enterprises, accounting for 97% total enterprises, based on labor and capital resources. These companies show a lack of technology, competitive ability, and market access.

Southeast Asian Research Institute (Singapore) published a report showed that up to 76% Vietnamese enterprises did not know about AEC and 94% enterprises did not obtain information on AEC assessment index… Therefore, 63% domestic businesses believe that AEC has no effect or little effect on the production of their business. This is a very wrong perception about the long-term integration strategy into the AEC.

Will soon untie rubber tree

According to experts, in the coming time, annually, timber industry would need averagely about 40 million m3 of wood, demands for imported wood materials would be about 20 million m3. Currently, many wood enterprises in Binh Duong are importing raw materials from the US, then export their products to the US. This is a wise choice, because raw materials imported from this country guarantee its origin, the US market is also the largest wooden product import market of Vietnam. However, in the long run, this is not a safe way, because raw materials account for 70% wooden product’s value. Thus, the utilization of local raw materials is the best way to reduce costs and heighten competitiveness of provincial businesses.

Researches showed that 80% wooden products in Vietnam were made from rubber wood. It is expected that by 2030, rubber wood source of the country would supply only about 6 million m3 of wood. Therefore, planting more rubber trees for raw materials is a useful method helping enterprises to ensure raw material source in the long-term strategy of the province. According to Law on Forest Protection and Development, rubber trees planted on forest land shall be considered as rubber forests. According to EU regulations, forest wood must conform to the legal timber procedure, must be licensed by the authorities, and have other documents such as land use rights, permits for forest investment...

According to Binh Duong Furniture Association (BIFA), most enterprises perceive rubber tree as an industrial tree, not a forest tree, thus logging has taken place arbitrarily. In the future, rubber wood will be recognized as legal wood type. The authorities should ould urgently take appropriate steps to “untie" rubber trees in order to help localities specializing in rubber tree cultivation in solving the problem of ensuring grower’s output and securing resources of provincial producers.

Reported by Phung Hieu – Translated by Ngoc Huynh