Eliminate severely illegal wood for promoting wood production

The forestry sector aims to export $US 11 billion in 2019. Photo: Nguyễn Thanh

According to the Ministry of Agriculture and Rural Development, the export value of wood and wood products in the first three months is estimated to reach $US2.3 billion, up by 15.6% over the same period in 2018. Wood and wood products is the industry with the highest trade surplus in the first quarter of 2019 among agricultural, forestry and fishery products of Vietnam with a surplus value of $US 1.02 billion.

The US, Japan, China and South Korea continue to maintain their position as key export markets with the proportion of exports accounting for 79% of the total export value of wood and wood products.

With many key exported agricultural products of Vietnam such as rice, rubber and pepper on a downward trend, why did wood and wood products experience such a huge breakthrough? Responding to this question of Customs News’s reporter, Deputy Minister of Ministry of Agriculture and Rural Development Ha Cong Tuan analysed: The production capacity of the whole industry has increased rapidly. Afforestation over the past few years has contributed to a higher supply of wood and an increase in processing and processing facilities.

“Besides that, the product quality increased quite well. Products are accessible, meeting the criteria of traceability management to help Vietnam's credibility increase. In particular, a different point of wood industry is that its market only accounted 6% of global market share. The state with the spirit of creating action, has organised many meeting to remove difficulties. As a result, basically, it has created encouragement and excitement for enterprises to invest in development", Deputy Minister Tuan said.

According to Argo Processing and Market Development Department (MARD): The Voluntary Partnership Agreement on Forest Law Enforcement, Governance and Trade (VPA/FLEGT) between Vietnam and the European Union (EU) which is valid in 2019, will be a great opportunity for wood products from Vietnam to export to the EU.

Besides that, in the world market, the trade tension of US - China has caused impacts on Vietnam's wood industry. A number of Chinese wood products are subject to new tariffs from the US that has lost its advantages for access to the US market, creating opportunities for Vietnamese substitutes. Recently, some Vietnamese enterprises have seen an increase in orders from the US.

Although US-China trade tensions bring many opportunities, however, the Argo Processing and Market Development Department indicated the trade war has also brought many challenges to Vietnam's wood industry.

The US trade agency has conducted investigation on tax frauds for a number of Chinese companies when those companies transfer a number of plywood products manufactured from China to Vietnam, taking production labels from Vietnam and then exporting them to the US.

The US trade agencies are aware of the possibility of tax evasion by Chinese businesses through the use of production labels from Vietnam. In the context of trade tension which has not shown signs of cooling down, it is likely that there will be an increase of investigations into tax for Chinese companies in 2019.

It is forecasted that in 2019, Vietnam's wood and wood products export will continue to expand. In the whole year of 2019, the export target of the entire forestry industry is set at $US11 billion.

A representative of the Argo Processing and Market Development Department assessed that 2019 will be an important year for Vietnam in developing mechanisms and policies to remove illegal timber from the supply chain, especially controlling the supply of imported wood.

Furthermore, in the process of developing these mechanisms and policies, it required close consultation with the business sector, in order to ensure that those mechanisms and policies are effective and do not incur too much costs about time and money for enterprises.

Besides that, in the future, the forestry sector should develop more new development models, with an emphasis on value created in design, trade, high-skilled labour and technological innovation.