Making Woodworking Industry a Spearhead Economic Sector

Mr Nguyen Manh Dung, an official at the Agro-Forestry Product Trading, Processing and Salt Industry Department (under Ministry of Agriculture and Rural Development), said: The Vietnamese wood processing industry possesses numerous favourable conditions to develop into a key industry. Over the past time, this industry has made impressive growth of exports. However, he noted that this growth is containing potentially unsustainable factors that may leave serious impact on the quality of industry growth. Specifically, the growth of wood processing industry is mainly based on exports but most earnings come from outsourcing production, which is decided by foreign orders and designs.

 

Remarking on input sources, Deputy Minister Ha Cong Tuan of Agriculture and Rural Development, said that a paradox obviously exists. While up to 70 per cent of input materials for wood processing are imported from foreign countries, up to 82 percent of domestic woods are chopped for low-valued exportation and domestic production. Vietnam is exporting too much raw wood and this is a big waste. This drawback remains a thorny problem for the Vietnamese timber processing industry to work out. Especially, the lax coherence between forest companies and wood processing companies is the central reason for inefficient use and low value of forest resources. He stressed that an urgent work at this time is to stabilise input supply and reduce dependence on imported inputs. The sector will strive to source 60 per cent of domestic inputs by 2020 and 75 per cent by 2030.

 

Mr Nguyen Chien Thang, Hawa Chairman, said Vietnam ranked sixth in the world in woodwork export. Although the world woodwork market has contracted 30 per cent, the remaining 70 per cent remains a great opportunity for Vietnamese businesses to tap. Powered by abundant potentials, hardworking people, products of good quality and reasonable prices, the Vietnamese wood processing industry is entirely likely to grow to US$15-20 billion in revenues in the next 10 - 15 years. For the time being, the most important advantage is Chinese wood processing companies are struggling with rising input costs, partly due to daily wage for manual workers rise to US$10 a day. This has resulted to a shift in order flows from China to Vietnam. In addition, the economic crisis wrecks on furniture companies not only in Vietnam but also in developed countries like Italy and Germany. Many are facing production stagnation or bankruptcy due to decreased consumption. However, Vietnamese companies may find out good opportunities to gather speed by upgrading equipment and technologies to enhance productivity and promote exports.

In 2011, Vietnam’s woodwork and log export reached US$3.955 billion, up more than 15 per cent against 2010. Its wood product export turnover approximated US$3 billion in the first eight months of 2012, representing an on year rise of 20.7 per cent. The United States, China and Japan are major importers of Vietnamese wood products which come in more types, sizes, colours and shapes Due to economic downturn, woodwork export is estimated to grow 11 per cent to US$4.3 billion in 2012, lower than 13 per cent in 2011. The value was predicted to climb to US$4.5 billion next year.

Most participants at the workshop hailed the robust growth Vietnamese wood processing industry. To address current weakness, the only solution for Vietnam is to turn the wood processing industry into a leading economic sector. Mr Thang said it is necessary to work out a wood processing plan by setting up an exclusive wood processing zone in a locality with abundant source of logs, good infrastructure and advantage in global competition. In addition, the government necessarily introduces long-term lending policies for wood processing companies to perform corporate restructuring, invest in modern machinery, equipment and technological innovation and form raw material zones to stabilise their operations and enhance their competitiveness in the market.

 

Also mentioning capital issue, Deputy Minister Ha Cong Tuan said apart from loan supports for enterprises, the Ministry of Agriculture and Rural Development will propose capital support policies, particularly soft loans for forest planters in the coming time.