Timber supply matters to Vietnam’s wood industry

Ensuring timber supply for domestic manufacturing is a problem in Vietnam as a large amount of raw timber is exported while many domestic producers lack raw materials.


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The local wood industry uses 30 million cubic metres of raw timber for manufacturing every year and has shipped products to more than 100 countries and territories. Only two thirds of the timber is sourced domestically while the rest has to be imported.

Duong Phuong Thao, Deputy Director of the Import-Export Department under the Ministry of Industry and Trade, said Vietnam exported US$7 billion worth of processed wood in 2016, while global demand stood at US$400 billion for wood products. Vietnam’s wood industry must grow further to capitalise on huge global demand.

timber supply matters to vietnam’s wood industry hinh 0

Last year, the country shipped 8 million cubic metres of wood chip and sawn timber to China. This volume was equivalent to the material shortage that domestic small and medium-sized enterprises faced, according to the Ministry of Agriculture and Rural Development (MARD).

Many wood processors and exporters believe that part of the industry’s problems can be blamed on lax coordination among businesses. Timber suppliers don’t coordinate with processors and exporters.

Bui Chinh Nghia, an official from MARD’s Department of Processing and Trade for Agro-Forestry-Fisheries Products and Salt Production, said the Government ordered a shutdown of natural forests in January this year. As a result, the volume of legal raw timber will fall by about 40,000 cubic metres, a problem for the wood industry.

To ensure timber supply for processing and export, many companies have suggested a ban on the export of raw timber.

Huynh Kim Bau, an assistant to the Director of Saigon Furniture Co. Ltd, said the Government should levy a tariff of 30%-35% on raw timber exports, the same level as applied by some regional countries like Cambodia and Thailand to prevent the loss of domestic materials. Enterprises also need to plant high-quality tree species that grow in a short period of time to meet the industry’s demand.

Nghia said in 2017, the MARD will switch the use of 200,000ha under small tree forests to growing big trees and issue sustainable forest certificate to those land areas. The total area under large trees and granted sustainable forest certificates is expected to reach 500,000ha by 2020, promising a high-quality and certified source of timber for processing and exporting.

About 1 – 1.2 million ha of protection forests in less important areas are set to become commercial forests in the near future, he noted.

Thao added the Vietnamese Government plans to negotiate with their Lao and Cambodian counterparts to create better conditions for Vietnamese firms to source timber from forests in these countries to increase the supply of raw materials.

VNA

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