US, EU markets flourish, more opportunities for Vietnamese wood

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In 2020, the whole industry aims to strive for export value of forest products of US$12.5 billion. Photo: N. Thanh.

Increasing purchasing power from US, EU

According to the Department of Agro-product Processing and Market Development (MARD),the cumulative export of wood and wood products in the first two months of 2020 reached US$1.53 billion, up 10.1 percent over the same period in 2019.

The US, China, Japan and South Korea remain the top four importing markets for Vietnamese wood and wood products in January 2020 with 81.6 percent of total export value of wood and wooden products.

In the coming time, the wood industry is forecast to have more opportunities to develop its brand and value due to good signs from markets.

Specifically, in the US, the demand for furniture in the US is expected to increase in 2020 thanks to the recovery of the housing market. The housing market in the US by the end of 2019 hit the highest level in the recent 13 years. This is a good sign for Vietnamese wood exporters.

In addition, recently, the US union of lumber manufacturers has submitted an application with the US Department of Commerce and the US International Trade Commission on anti-dumping and safeguard duties on wooden frame products from Brazil and China. Trade problems between the US and China and Brazil will also create opportunities for Vietnamese exporters.

In the EU, while exports of wood furniture of this market declined, imports of this product group began to increase in 2019. However, according to the International Tropical Timber Organization (ITTO), US-China trade tensions have led Chinese exporters to diversify their export markets. The EU market is a new destination.

"Leading the trend of increasing imports of tropical wood furniture is the entry in the EU market by major exporters from Vietnam, India and, most recently, Indonesia. Therefore, Vietnamese wood products and Chinese wood products on the EU market will be more competitive,"said the Department of Agricultural Product Processing and Market Development.

Investment in added value needed

According to the General Department of Forestry (Ministry of Agriculture and Rural Development), in 2020, Vietnam's wood industry will have many opportunities to promote exports, especially when the EU-Viet Nam free trade agreement (EVFTA) is expected to take effect in July 2020. Currently, Vietnam's interior furniture export turnover accounts for only 6 percent of the $150 billion in global wood furniture trade. Enterprises have opportunities to expand and develop their export market shares.

However, the General Department of Forestry also acknowledged the industry also faced many challenges, typically the risk of businesses being sued due to increasing dumping and subsidies.

In addition, businesses in some localities such as Dong Nai and Binh Duong struggle to recruit skilled workers andfindpremises to build factories to expand production due to competition with other industries. In addition, another important factor is the supporting industry has not been developed, which is mainly imported andwith high costs, so the price of products is not competitive.

Recently, to take advantage of opportunities to increase Vietnam's wood exports as well as protect the domestic wood processing industry, Vietnam has employedmany measures. For example, Vietnam has developed national FSC standards for forest management and temporarily suspended the business of transiting and temporarily importing plywood into Vietnam for re-export to the US.

Arepresentative of the Department of Agricultural Product Processing and Market Development said that to make the most of the advantages and seize the opportunities in the future, businesses need to be ready to invest in added value such as design and trademarks. This is a way for Vietnam's wood industry to improve export product reputation.

In addition, the State also needs to promote the completion and issuance of documents and procedures to operate the Vietnam Forest Certification system in accordance with domestic and international regulations and practices.

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Deputy Minister of Agriculture and Rural Development Ha Cong Tuan requested that in 2020 the industry focus on addressing the market problems associated with the management of chain production and improving quality of seed varieties to convert small timber tree farming intobig timber tree farming for domestic processing as well as exports.