Winning in the US and EU, exports of wood are steadily growing

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US$11 billion is a feasible target of exporting forest products in 2019. Photo: N.Thanh.

Taking opportunities to promote exports to the US

The latest report from the Department of Agro-product Processing and Market Development (Ministry of Agriculture and Rural Development) shows that in the first 8 months of the year, the exports of wood and wood products totalled about US$6.66 billion, up by 17.5% compared to the same period in 2018.

The United States, Japan, China and South Korea maintained the top 4 import markets of Vietnam's wood and wood products in the first 7 months of the year with 80.2% of total export value.

Markets with strong exports of wood and wood products were Saudi Arabia (up by 46.9%), the US (up by 32.8%), Taiwan (up by 27.9%), Japan ( up by 18.3%) and Germany (up by 14.5%).

The Department of Agro-product Processing and Market Development explained that exports of agricultural and fishery products both decreased in the first 8 months of the year, but those of the forestry industry have grown strongly. Accordingly, Vietnam has made good use of the opportunity to boost exports to the US market.

According to statistics from the Center for Economic Reform in Indonesia, in April 2018, China's share of indoor and outdoor furniture in the US market was 48%, while Vietnam accounted for only 7.4% and Indonesia was 1.63%.

Before the US-China trade tensions escalated, by April 2019, China's market share decreased by 2%, down to 46%, while Vietnam's market share increased by 3.1%, rising to 10.5%, and Indonesia increased by only 0.02%, increasing to 1.65%.

In addition to the US market, the Department of Agro-product Processing and Market Development also cited the cases of exporting wood to the EU. Accordingly, Vietnam continues to maintain its leading position in exporting interior and exterior wooden furniture to the EU thanks to its improved design and quality, and capacity to supply high volume orders in the mid-range segment.

The EU importers appreciated the technological improvement of Vietnamese wood products. These improvements are superior to other Asian countries and are increasingly able to meet the high standards of the EU market.

Vietnam's exports of timber and wood products to the EU market are expected to have good prospects thanks to the advantages of the EU-Vietnam Voluntary Partnership Agreement on Forest Law Enforcement, Governance and Trade Vietnam and EU (VPA/FLEGT) as well as the potential of Vietnam - EU Free Trade Agreement (EVFTA).

Efforts to improve quality and reduce price

This year, the forestry industry aims to achieve export turnover of US$11 billion. With the results achieved, this is quite feasible. Minister of Agriculture and Rural Development Nguyen Xuan Cuong also confidently said that: “This year, forest products are an important commodity to salvage the growth of the agricultural sector.”

In order to maintain the export turnover of wood, some experts said, in the future, state management agencies and businesses should be careful. When exporting to the EU, wood and wooden products from Vietnam will have to provide explanations on traceability under the provisions of the EU Timber Regulation (EUTR) until issuing FLEGT licences under the VPA/FLEGT. Therefore, it is necessary to promote the improvement of the system of ensuring the origin of wood and issuing FLEGT certificates for Vietnam's export products.

For the US market, in order to minimize the risks arising in the context of the US-China trade war, the authorities need to coordinate to review the production and business activities of FDI enterprises; products from Vietnam to the US as well as from China to Vietnam.

The process of issuing certificates of origin must also be closely monitored, ensuring that certificates are granted only for eligible enterprises and products.

According to the Department of Agro-product Processing and Market Development, enterprises need to focus on investing, applying automation in production, applying new management technology, improving quality and skills of workers to reduce costs, increasing labor productivity to improve product competitiveness and catching up with consumer trends of the EU market.

In addition, businesses must also strengthen cooperation, create and form a chain of links from raw material production to export in order to improve the efficiency of the supply chain by focusing resources on professional practice, reduce transaction costs and production costs, improve efficiency in production and business.

Only 5% of Vietnam’s wood exports designed locally Although Vietnam has reported high growth in wood and wooden product exports in recent years, only 5% ...

Nguyen Quoc Tri, Director General of VNFOREST, said: “In the future, the sector will focus on effectively implementing the forestry restructuring scheme; build and replicate successful linkage models between wood processing enterprises and afforestation households to both ensure legal wood sources in the country and increase added value, reduce costs for product price, thereby improving the competitiveness of Vietnam’s wood and wood products.”