Wood Processing Industry Seeking Solutions to Materials

 

 

According to the figures from the Vietnam Timber and Forest Product Association (Vietfores), the wooden product export revenue increased over 30 per cent a year on average in the 2001-2005 period. Particularly, the wooden product export earnings jumped from US$61 million in 1996 to US$1.517 billion in 2005 and nearly US$1 billion in the first half of 2006.

 

Mr. Ngo Ton Quyen, Chairman of Vietfores, said 80 per cent of timbers for the processing industry are imported. Currently, Vietnam has nearly 2,000 wood processing enterprises, 435 traditional handicraft villages and nearly 27,000 small timber processing units. From 2000 to 2002, each year the import volume was some 3 million m³ of timber but it increased to 8-10 million m³ a year from 2003 to 2005.

 

Meanwhile, the price of timber in the domestic and foreign markets is soaring due to the sequences of forest fires, floods, degrading environment and fuel price-push transport costs. In the past three years, the import price of timber grew 20-22 per cent. This significantly lessened profits of wood processing companies.

 

Quyen said the wooden product export revenues will reach US$5.5 billion in 2010. According to environment analysts, if Vietnam is slow at improving the domestic material source, it will wholly rely on import sources within the next five years.

 

In recent years, timber materials were sourced from domestic forests and other countries. According to the Agro-forest Product Processing and Salt Industry Department, although the forest area has been considerably expanded, the quality of forest increases very slowly and the forest productivity is low. As a result, the Government advocates the policy to reduce the timber exploitation volume every year.

 

Regarding forests, Vietnam has over two million ha of forests scattered throughout the country. Each year, the country exploits 2.2-2.3 million m3 of timber but mainly most of them are cut down from small trees and are suitable for the production of pulp, chopped wood and planks. The domestic source can satisfy 20 per cent of the demand while the remaining 80 per cent is made up by imports from international and regional countries like Cambodia, Laos, Myanmar and Indonesia.

 

According to the Ministry of Industry, many countries in the world have tightened the export of timbers; hence, the expenditure on imported timber increased merely 3 per cent on-year in the first quarter of 2006, compared with the over 20 per cent on-year increase in the first quarter of 2005. The reason for the fall is resulted from export limitations from several major timer exporters in Southeast Asia such as Indonesia and Malaysia. The price of imported timbers increases steadily as many other countries have also limited export of timbers.

 

In recent years, small-sized Vietnamese wooden furniture exporters have teamed up to fulfil large orders from foreign importers, especially from the US. Mr. Tran Quoc Manh, Vice Chairman of the Ho Chi Minh City Handicraft and Wood Processing Association (HAWA), said “When a company receives a too big order from a foreign firm, it will immediately join hands with other companies to share the order. The coopearation tendency is further strengthened when the Vietnamese wood industry is focusing on setting up the Ho Chi Minh City-Dong Nai-Binh Duong triangle in the south, which accounts for 60 per cent of national wood processing capacity, and the Binh Dinh-Gia Lai-Dak Lak triangle in central and central highland regions.”

 

According to Mr. Ngo Ton Quyen, Vietforest and its members are now promoting the setup of three timber importing hubs in the northern, central and southern parts. Each hub is a joint stock company with a registered capital of at least US$10 million. However, Quyen said Vietfores is in need of the government support, which is the site for timber warehouses and soft loans. In addition, the government should also apply sound policies to quickly widen the material-forest area.