Compared with other countries in the region, the wood processing industry in Vietnam has been considered as favorable factors in the competitive position of exports and domestic consumption. However, the sector has been trying to find new entrance in order to face with the difficult economic situation.
To October 2012, Vietnam is currently ranked sixth in the world, second in Asia and first in Southeast Asia in terms of exports of wood and wood products. Vietnam currently reached $ 5, 2 billions in the total of furniture manufacturing. The sector target is that the value will increase by up three to four times in the next 15 years. In the term of market, when the competitive market is increasingly fierce, many other export sectors are showing the sign of narrowing or difficulties, the wood industry is still optimistic. Mr. Huynh Van Hanh, Deputy Chairman of Handicraft and Wood Industry Association of Ho Chi Minh City (HAWA) said: In particular, many traditional partners, especially Japan that has to rebuild after the tsunami, the demand of using furniture is great and this turnover has been increasing up to 30% in the first nine months of 2012 and even increasing more. Australia, New Zealand has also increased 16%.
At the end of 2011, the enterprises have used over 13 cubic meters of wood, in which domestic materials accounted for 11 million cubic meters, including 6 million cubic meters of concentrated forest, over 2 million cubic meters of rubber timber and scattered timber. Looking at 2020, many experts in this field confirm that it is possible to supply 22 million cubic meters of raw timber for wood processing industry. Particularly, with approximately 800,000 hectares of rubber and 25 years of mining cycle, 5-6 million cubic meters of raw timber can be exploited. 2.3 million hectares of plantations will provide 15-16 million cubic meters by 2020 in particular. In addition, the large amount of scattered trees grown annually in the area of local people has been not mentioned that provide tens of millions of cubic meters. It has contributed to help the enterprises reduce the worries about shortages of raw materials.
China is the current biggest competitor of Vietnam; however, they have changed strategy when transferring the manufacturing enterprises in inland and pushing costs up. Other countries in the region such as Malaysia, Thailand … because the labor cost is double than the previous time, it significantly affected export prices. Mr. Hanh noted that: “It is completely possible to the wood processing industry become one of the key economic sectors of the country as expected. It is important that in addition to the policy-oriented, long-term of functional industries, the enterprises have to strongly invest and change in technology and equipment. Currently, in many countries in Europe such as Germany, Italy, and France … which have the strength of wood; many businesses have been lost and have to close. This will be an opportunity for us to dominate the market as well as purchase, upgrade equipment with good prices … ”
Remaining many jobs need do
According to the statistics of the agricultural sector up to the present, there are nearly 6,500 wood processing enterprises of the different types of ownership, in which non-state rate accounted for more than 95%. In particular, the number of enterprises, which have oversea investment only accounted for 15% but the value of output and export turnover, accounted for more than half. Mr. Nguyen Manh Dung, Director of Department of Trade Processing of Agriculture Forest Products and Salt said that Korean and Taiwan enterprises invest properly, focus on quality and have a long-term. Stages of the production chain are automated from the input to the final product that has helped them to reduce the price and improve good quality. Meanwhile, many domestic enterprises have not yet reached this level and remained the heavy eating away and temporary outsoaring …
An in-depth analysis, if calculated on the level of employment, there are up to 46% of micro-scale wood processing enterprises, 49% of small-scale enterprises, and remaining medium and large enterprises. In the term of investment, there are up to 93% of the wood processing enterprises in micro and small scale. In many domestic enterprises and facilities, especially in the villages, workers are hardly trained, only work manually… According to Mr. Dung, this problem makes domestic high-ranking products difficult in competing on price, quality … It also results in the reason that a great of Vietnamese enterprises accept to “share” the outsourcing to foreign investors.
Mr. Ha Cong Tuan, Deputy Minister of Agriculture and Rural Development, said that the most difficult of the wood industry is the shortage of specific raw materials to process high-ranking wooden furniture for exporting. The manufacturing operations of many enterprises still depend much on foreign sources of raw materials, making the business situation of enterprises passive and weakly competitive. Domestic enterprises have to import a large amount of raw materials each year to manufacture wood products for medium – high segment in order to serve difficult markets such as Japan, USA … The growth of sector was mostly based on exports. However, the current export markets must face to more difficult policy and fierce competition….
Exit has appeared
At the meeting on woodworking held at the end of August, 2012 in Ho Chi Minh City, Ministry of Industry and Trade confirmed that it is necessary and urgent to restructure in the field of processing and trading of forest products to enhance product value. Firstly, the ministry is going to build and implement the Woodworking planning towards the cohesion between the units of manufacturing raw materials with the processing enterprises, in order to use efficiently forest resources. Scientific research, technology and application of technical progress is towards formation of high-tech processing of forest products, create quality products, increasing value and high competitiveness will be high promotion focus. Ministry of Industry and Trade will deploy the development of human resources including direct production and management, trade promotion, improvement, rebuilding the distribution system … in order to bring the effective and sustainable development of local enterprises.
Mr. Dinh Ngoc Minh, Deputy Director of Department of Agricultural Economics under Ministry of Planning and Investment said that the wood processing industry development is the advantage to develop supporting industries. Currently, most of these devices have to imports resulting in increasing output costs and wasting while the domestic enterprises can produce. Therefore, the Ministry is promoting to build a prior strategy for the sector’s development. Besides, incentive policies for tax, investment, research and technology application, incentives to attract the foreign investment … are being considered to implement as soon as possible by functional sectors.
More importantly, when the supporting industries for the wood processing industry are developed, in addition to creating the premise for sustainable development of sector, it also contributed to the creation of jobs for local people. Mr. Minh emphasis through our calculations, every $ 1 billion in export turnover generate about 1 million jobs, supporting industries have ability to grow this figure up to 2 times.
Mr. Nguyen Manh Dung – Department of Trade Processing of Agriculture Forest Products and Salt: The wood processing industry in our country take advantages to develop key industry while taking steps boom. Only nine months of 2012, total export turnover of wood and wood products reached $ 3,394 million, increasing 20% compared with the same period. Importantly, we have moved from exports of crude, mainly wood, flooring plywood, lumber to exports of wood products manufactured with art and engineering, prestige brand step by step
Mr. Nguyen Chien Thang, Chairman of HAWA: We often say that the wood processing industry is a key economic sector but in the catalog of facilitating the development sector, wood processing industry is not appeared. We suggest that the ministries and functional sectors may consider to add wood sectors in the list and it will be the stimulant to help businesses Woodworking strongly invest, change in technology and equipment that is suitable as well as promoting the restructuring of quite old and outdated chains and equipments of factories.
Mr. Vo Truong Thanh, General Director of Truong Thanh Wood Engineering JSC, said that: Nowadays, the highest competitive pressures of wood enterprises is partners requires suppliers to prove the origin, the certificate of legal wood… In the situation of low purchasing power of foreign market, many businesses have turned to the domestic market but others are still struggling due to not creating the product with appropriate design, lack of distribution systems and unreasonable price …