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Lack of timber threatens wood industry

Sunday 29, 01 2017
Ensuring timber supply for domestic manufacturing is a problem of Việt Nam as a large amount of raw timber is exported.
Lack of timber threatens wood industry

Ensuring timber supply for domestic manufacturing is a problem of Việt Nam as a large amount of raw timber is exported. 

The wood processing industry is going to face a lot of difficulties in the future following the government’s order close natural forest gates from January 1 - stated Bui Chinh Nghia, deputy head of the Ministry of Agriculture and Rural Development’s (MARD) Forestry Department.

Ensuring timber supply for domestic manufacturing is a problem in Việt Nam as a large amount of raw timber is exported despite many domestic producers lacking raw material.

To have enough materials for processing and exports, many businesses have proposed that the government prohibit the export of raw material to other countries.

If the quantity of exported wood is retained in the country, it would help local businesses take the initiative in signing orders with their partners in Europe and the United States.

Sharing his opinion on this proposal, Huỳnh Kim Báu, 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, such as Cambodia and Thailand, to lower exports. In addition, enterprises need to plant high-quality tree species that grow in a short period of time to meet the industry’s increasing demand. 

Huỳnh Văn Hạnh, deputy chairman of the Handicraft and Wood Industry Association of HCM City, said small- and medium-sized enterprises (SMEs) need to co-operate with each other if they want to compete with foreign firms.

The association should make decisions based on three criteria -- they are in real need of co-operation with other, they should trust their partners, and their rights and interests should be based on fairness as the work will be divided equally based on production and supply for each participant.

As for those enterprises which are capable of expanding their business, they should invest in advanced technology to raise capacity and quality to overcome difficulties and access large orders.

There are more than 4,000 timber processing and export businesses but only 7% of them are large and could easily access huge orders from clients from the United States, Japan and the European Union. The remainder, which are small and medium enterprises, have weak competition capacity and small investment capital, hence they experience more difficulties while seeking orders.

Meanwhile, the number of foreign investment businesses in the country is small, yet they hold more than 50% of the market share. Vietnamese SMEs mostly do outsourcing work of these enterprises.

The local wood industry uses 30 million cu.m. 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.

-Compiled by VietnamCredit-

Categories:
Financial News

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