Vietnam aims for transparent and legal wood industry

Workers of Binh Dinh-based Tai Phuoc Co. Ltd. polish wooden chairs

In June, the US Department of Commerce (DOC) initiated an investigation into tax evasion for plywood products imported from Vietnam and suspected use of Chinese materials.

Other major importers of Vietnamese timber products including the European Union (EU), China, Japan and the Republic of Korea are also eyeing stricter traceability regulations to ensure legal timber origins.

To facilitate exports of this key product, Vietnam is trying to build the Vietnam Timber Legality Assurance (VNTLAS) system along with the early issuance of EU Forest Law Enforcement, Governance and Trade (FLEGT) licence for exports of wood products to the EU market.

Joining the EU in implementing the FLTGT Voluntary Partnership Agreement on Forest Law Enforcement, Governance and Trade (VPA/FLEGT) will not only promote exports of Vietnamese wood products to the EU but also increase prestige and open doors to other markets.

The agreement is in line with Vietnam’s Law on Forestry, both prohibiting the import, export, exploitation, processing and trading of illegal timber.

“Boarding the VPA/FLEGT ship with the EU would take the domestic timber manufacturing industry to another level”, said Ngo Sy Hoai, Vice President, Secretary-General of Vietnam Timber and Forest Product Association (VIFORES).

Beneficiaries would include more than 3,000 processing and exporting enterprises, 340 craft villages and approximately 1.4 million forest farmer households.

According to Hoai, most Vietnamese firms processing and exporting timber to the EU can meet these standards.

“This action would only systematise what the industry has been doing, now placing everything under a legal framework for transparent enforcement,” he said.

To fully implement VPA/FLEGT, the Ministry of Agriculture and Rural Development (MARD) has completed a draft decree for implementing the Vietnam Timber Legality Assurance to submit to the Government for promulgation.

VNTLAS is a national system to ensure compliance with legal timber legislation at each stage of the supply chain, including harvesting, importing, purchasing, selling, transporting, processing and exporting.

The decree also requires the classification of enterprises into two groups: Group I and Group II. Group I features firms fully complying with legal timber regulations and are not subject to examination and origin verification when filling to export.

VNTLAS works on the basis of enterprises’ self-declaration and self-responsibility through the network of the Enterprise Classification Information System and authority’s verification. This will decrease administrative work for firms while still allowing authorities to keep the origins of timber products in check and encourage enterprises’ responsibility in law enforcement, according to Deputy Minister of Agriculture and Rural Development Ha Cong Tuan.

Enterprises that do not meet the classification criteria will be subject to the inspection and certification of origin before being granted export licences to the EU.

According to a quick survey conducted by MARD, more than 90% of processing and exporting firms in Vietnam belong to Group I. Vietnam aims to have all firms in the wood industry to be classified as Group I.

However, deputy director-general of the Department of Science and Technology and International Cooperation Nguyen Tuong Van has warned that “the most difficult time still lies ahead”.

When the decree comes into effect, but without FLEGT licences, enterprises still have to prove their product origin to be eligible for export.

“Issuance of FLEGT certification for wood exporters to the EU needs to be done as soon as possible," she added

Besides, the classification of enterprises can only be carried out six months after the implementation of VPA/FLEGT.

“If VNTLAS can be operated at the beginning of 2021, the first FLEGT can only be issued at the end of 2021 or early 2022," Van said.