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Paradox of wood industry in Vietnam

Date: 18-01-2018 | News

Wood processing industry becomes one of key exports sector in the country. First three months of 2013, despite the difficulties of economic recession, wood processing industry has been growing strongly, the monthly average of export turnover has reached from US $ 400-450 million. As predicting in 2013, it is possible to export US$ 5.5 billion compared with about US$ 4.67 billion in 2012. In recent years, the import of wood has been decreasing. Processing and importing raw timber in 2012 accounted for 66%. In first two months of 2013, it has reduced by 30% of volume compared with the same period in 2012. According to Ministry of Industry and Trade, in 2012, the export of wood and forest products in Vietnam has achieved about US$ 4.67 billion in turnover, increased by over 15% compared with 2011. In 2012, export of wood and forest products also is one of sectors that has high trade surplus compared with the country, at level of US$ 3 billion.nghch-ly

Logging from plantation

Mr.  Ha Cong Tuan, Deputy Minister of Agriculture and Rural Development, said that 10 years ago, the volume of logging from plantation is less than 400.000 cubic meters per year, in 2012 is 15 million cubic meters in total demand of using wood of 19 million cubic meters. By 2020, there will be 22 million cubic meters of raw timber in the country supplying for processing needs. With 800,000 hectares of rubber, mining cycle of 25 years, it is estimated that the rubber can be logged 5-6 million cubic meters of raw timber by 2020.  Along with over 2.5 million hectares of plantations, it provides 15-16 million cubic meters in 2020, excluding the amount of scattered wood that provides tens of millions of cubic meters.

Mr. To Xuan Phuc, Representative of Forest Trends Organization, said that the country has grown the quite large forest area, about 3.5 million hectares, with the participation of 1.4 million households. Timber harvests are approximately 6 million cubic meters, in which 80% used for processing chips of export and 20% for wood processing. Logging from plantations meets the needs of 50% of raw materials for processing chips of export.

No competitive advantage

The Northern and Central Vietnam cover the area and production of plantation but only 70% of the establishments processing chips piece and veneers. Instead of using timber plantations to produce 65.000 tons of pulp, Vietnam Paper Corporation exports more than 606.000 tons of chips for with US$ 125 per ton (paradoxically import price of pulp to produce up to US$ 900 – 1000 per ton).

The global market of importing wood and wood products has been requiring in wood backgrounds but the local wood cannot meet. The area of plantation with FSC certificated has only few tens of thousands of hectares.  Because of logging early, the domestic wood  often has  small diameter, resulting in low quality, dependent on imports in order to produce valuable goods. It causes the wood processing industry is less competitive in the market.

Currently, most businesses do not meet the product distribution network from aboard and have to distribute through the retail group. Because of raw timber accounting for 35- 40% of import prices, without the supporting industry, mostly  higher import prices (up 10%), cost of sales up to 14%, corporate profits is only about 5% of export value

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