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Dinh Vu

Economic Sector

Last updated: Wednesday, May 23, 2018


Vietnam Wood Industry Pursuing Sustainable Development to Take Advantage of FTAs

Posted: Wednesday, February 22, 2017

Woodwork products are one of the key exports of Vietnam with an export value of over US$7.3 billion in 2016, up 10 per cent compared to 2015. According to Mr Nguyen Chanh Phuong, Vice Chairman & General Secretary of Handicraft and Wood Industry Association of Ho Chi Minh City (HAWA), despite difficulties, Vietnam’s wood processing and handicraft industry has still maintained steady growth in recent years and become the fifth largest exporter of wood furniture in the world and the largest in Southeast Asia. Vietnam Business Forum has an interview with him about potential and advantages of Vietnam wood processing industry, as well as HAWA’s support activities for its members.

Could you please give a brief introduction of HAWA’s activities in recent years?
Established since 1990, Handicraft & Wood Industry Association of Ho Chi Minh City (HAWA) is a volunteer and non-governmental organisation. HAWA now has more than 400 members in fields of wood processing (interior & exterior decoration, 51 per cent), handicraft (bamboo, rattan, water hyacinth, pottery, lacquer, 22 per cent), trade (wood trading, wood processing machinery, coatings, hardware, 22 per cent), and service (5 per cent). Most of our members come from Ho Chi Minh City and neighbouring provinces like Binh Duong, Long An and Ba Ria-Vung Tau.

On a yearly basis, HAWA organises 2 exhibitions including VIFA Home &VIFA Expo. VIFA Home is organised every November, while VIFA EXPO takes place every March in Ho Chi Minh City. The next VIFA Expo will last from 8 to 11 March at Saigon Exhibition & Conference Centre, District 7, Ho Chi Minh City. In addition, in 2017, HAWA will organise VIFAWoodMac – the first exhibition of wood material and machinery organised by HAWA in Vietnam. The VIFAWoodMac will take place in Binh Duong province from 23 to 25 August 2017.

In its over 25 years of development, HAWA has helped consolidate the resources and potential of Vietnam wood processing industry to improve its competitiveness in international markets, building close relationships with its members and other organisations, making significant contributions to the common development of Vietnam's wood processing industry.

With the purpose of meeting the increasing demands of the wood processing and handicraft industry, as well as supporting its members, HAWA has added two new functions to its portfolio including technology and communications. The reason for launching two new functions is very simple, all sectors are now focusing on technology, especially labour intensive sectors like textile and garment, wood processing, etc. We have given birth to a newsletter with 6 issues per year named Go va Noi That (Wood and Interior decoration).

In addition, HAWA has been organising training courses and providing consultancy services, conducting trade promotions and seminars with cooperation and support from many related units, including Vietnam Chamber of Commerce and Industry (VCCI), to help members improve their competitiveness and expand their markets both at home and abroad.

How do you evaluate the trade situation of Vietnam furniture industry?

The growth rate of Vietnam wood processing industry is lower than that of 2015, but it still remains good if compared with that of other countries like China. China’s export value declined by 10 per cent compared to 2015 due to rising cost of labour. In 2016, Vietnam emerged as the 5th largest exporter of wood furniture in the world and the largest in Southeast Asia. The US, EU, Japan, Korea and China are still key export markets of Vietnam wooden furniture.

According to you, what are the challenges for Vietnam's furniture industry?
Frankly, technical requirements are the biggest challenges for Vietnamese furniture manufacturers in assuring the legality of wood used in the processing industry. This will be more difficult for those unaware of VPA and how it may affect their business operations, including environmental issues, working environment and especially the origin of product. Vietnam has completed negotiations on the Voluntary Partnership Agreement on Forest Law Enforcement, Governance and Trade (VPA/FLEGT) between Vietnam and the European Union, opening many opportunities for market development in the future. The agreement is expected to be ratified in 2017.

The VPA is expected to boost confidence in the legality of timber products exported by Vietnam, as well as deliver social and environmental benefits.

Another challenge is material shortage. The country needs over 31 million cubic metres of wood materials year on year. Local supply does not meet the continuously increasing demand. Additionally, the fact that Chinese businesses are now setting up factories and units to collect wood for export to China contributes to this crisis.

What is the role of HAWA in the new period of development of Vietnam furniture industry?
With full support and cooperation from Ho Chi Minh City’s People Committee, Ho Chi Minh City Department of Industry and Trade as well as from related departments and agencies, HAWA will play the role of an important linking bridge between businesses and businesses, businesses to domestic and international markets.

Firstly, we will continue maintaining our annual activities, strengthening our trade promotion activities, organising specialised exhibitions, promoting business connectivity, supporting HAWA’s members in particular and Vietnamese wood processing companies to pursue sustainable development to take advantage of free trade agreements.

Secondly, HAWA will continuously strengthen its training activities for members. HAWA will speed up the establishment of a training centre, collaborating with universities and colleges to work out policies that are suitable with the sustainable development of Vietnam wood processing industry. In 2017, we will cooperate with Southern Technology and Agro-Forestry Vocational College to provide training courses for workers in the wood processing industry under a project funded by Danish Government.

Thirdly, we will focus on making HAWA a key player of the wood processing industry in the Southern key economic zone, strengthening training activities and human resource development, and capacity building. We have been proposing Ho Chi Minh City People’s Committee to invest in constructing a larger-scale exhibition centre in the city to meet the increasing demands of exhibitors.

What do you think of the competition from Vietnam based Chinese and Taiwanese furniture manufacturers?
Amongst foreign invested enterprises in the furniture industry in Vietnam, China and Taiwan account for one-third. Taiwan has invested in the wood furniture industry in Vietnam for a long time to make use of low labour cost in the country. A wave of migration to Vietnam by Taiwanese furniture makers began in 2006 and has since accelerated. Most of them are now operating in Binh Duong province and outside Ho Chi Minh City.

The majority of Chinese and Taiwanese are expressing willingness to invest in Vietnam to enjoy the benefits of free trade agreements as well as tax exemption from European Vietnam FTA.

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