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Potential risks faced by Vietnam’s timber industry

Potential risks faced by Vietnam’s timber industry

Monday 13, 12 2021
Vietnam's timber industry is facing great risks when the import turnover of wood products from the Chinese market tends to increase rapidly.

Import turnover from China is on rapid rise

To Xuan Phuc, an expert at Forest Trends, said that the two-way trade in wood products between Vietnam and China is very huge, with Vietnam enjoying surplus.

However, the size of the surplus is gradually shrinking. The export turnover of Vietnam's wood products to China has shown signs of deceleration or even slightly decreased since 2020 while the import turnover of wood products into Vietnam from this market is increasing sharply.

Raw materials for peeled/laminated boards, plywood and wood products are the main products that China is currently exporting to Vietnam that tend to increase.

Mr. Do Xuan Lap

Meanwhile, Mr. Do Xuan Lap, Chairman of the Vietnam Timber and Forest Products Association, said that China is one of the three most important markets of Vietnam's timber industry, both in terms of supply and demand. On average, each year, the bilateral trade turnover of Vietnam and China in wood products reaches about 2 billion USD, with the trade balance in favor of Vietnam. Bilateral turnover is continuing to expand.

Specifically, in 2018, the import turnover of wood and wood products from China into Vietnam was equivalent to 43% of the export turnover of this item from Vietnam to China in the same year. However, this proportion has increased very rapidly since 2019 to 54% in 2019, 70% in 2020 and 70% in the first 9 months of this year.

"If this growth momentum in imports from China to Vietnam is maintained, the import turnover into Vietnam from China will soon surpass the export turnover from Vietnam in the not too distant future" said. Mr. Lap.

Potential risks

According to a report by the Vietnam Timber and Forest Products Association, peeled/laminated boards, plywood and wood products account for the largest proportion in Vietnam’s wood import turnover. These imported veneers are mainly made from wood species such as Birch, Okoume, and Bintangor.

Vietnam Timber and Forest Products Association

These types of products are imported into Vietnam and used as a surface layer for boards, then used in plywood production for export to markets including Korea and India. In addition, they can also be processed to create cabinets, tables and chairs which will be exported to the US and EU markets and also serve the domestic market.

These products of peeled board/plywood contain legal risks regarding the source of input wood. Specifically, Russia's birch wood source has a potential risk of illegal timber, which has also been warned before. Besides, wood originating from Africa (except South Africa) is defined as legally risky wood. This flow of risk-based plywood products hinders the Government's efforts and directly affects the image of the Vietnamese timber industry.

Notably, wood products imported from China has experienced the highest growth rate in recent times. The rapid growth in imports of this item, especially in the context of the US-China trade tensions, has raised concerns about Chinese enterprises using Vietnam as a transit country for its products to be exported to the United States in order to avoid U.S. duties on goods from China.

The research team of Timber Associations and Forest Trends has also issued a warning about the type of risk in trade fraud for this item, especially for kitchen cabinets made from plywood and parts of sofa imported from China.

Plywood imports from China have also increased sharply recently. The reason why Vietnam continues to import plywood from China is that the production capacity of this product in Vietnam is still limited, both in terms of volume and quality of output products.

Plywood imports from China

Similar to wood products, plywood imported from China also contains risks of trade fraud. The US government is currently investigating plywood and kitchen cabinets of some Chinese enterprises currently operating in Vietnam.

Therefore, reducing the risk of trade fraud in wood products imported from China plays an important role in maintaining and developing Vietnam's wood industry.

Over the past time, Vietnamese authorities have been actively coordinating with timber associations and related parties in identifying risks and providing sanctions for violating companies. It is suggested that these measures and sanctions should be prioritized and strengthened in order to limit risks of imported timber.

Source: thesaigontimes

Compiled by VietnamCredit

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