Wood industry "leapfrog" opportunities from CPTPP

How has the CPTPP been affecting, and will affect the processing industry for wood exports of Vietnam, sir?

It must be confirmed that with the CPTPP, opportunities for the wood industry are more challenging. At the present time, orders from the CPTPP from countries such as Canada, Japan, New Zealand, Australia, and Peru... have increased very strong. For example, wood exports to Canada were previously small, less than 100 million USD a year, but timber companies have signed export contracts worth 200-300 million USD in Canada in 2019.

Under the CPTPP Agreement, the use of internal materials is required. Vietnam is committed to buying wood from Canada, New Zealand, and Australia ...; the partners are willing to buy products of Vietnam. Another example is the case of Japan. At present, Japan has a dealer in Vietnam. Vietnam imports wood raw materials from Japan. Therefore, there have been 4-5 Japanese enterprises that have discussed with Vifores to increase the value of wood imports to Vietnam by 1.3 times in 2019.

How will the timber processing and exporting enterprises face the typical challenges?

The biggest challenge for the timber sector is the issue of raw material when implementing the CPTPP. In 2017, the timber industry uses a total of 38 million m3 of timber, of which 8.4 million m3 of timber are imports and about 30 million m3 of timber from in the country. Under the CPTPP Agreement or all previous FTAs, there is the very important chapter of origin, which must ensure the legal origin of the timber. That is a huge problem.

In the world, there are many countries that sell timber but not every country has legal wood that means “clean wood”. Previously, Vietnam imported wood from Laos, Cambodia, Myanmar... These countries do not have the FSC forest certification to ensure that the wood is clean. Buying wood from advanced countries such as the United States and Canada, wood is guaranteed, but the type of wood from these countries the market does not required much of. In 2018, Vietnam must use about 41 million m3 of timber. Even if you find enough wood material, the problem is the cost of buying, transporting costs are growing... all costs are increasing, but the buyer does not accept high prices. On domestic wood sources, the forests that have FSC certification to be guaranteed as clean wood is only about 220 thousand ha out of about 4-5 million hectares. If we want to have 1-2 million hectares of clean wood we will also have to strive for several decades.

In addition to material resources, other significant challenges are the investment in technology and the training of skilled workers. In the process of deep integration, in order to meet the requirements of certificates and papers when selling products directly to foreign consumers, the wood processing enterprises are forced to change the technology as well as change the technology operators. Thus, enterprises need capital to import new technology, and then need to have training facilities to operate that new technology. For example, with the 4.0 industrial revolution, the wood industry had to use automatic wood sorting robots. This would require more instructors to be able to operate the machines. This is not something that can be done in one day, but is a big challenge to the wood industry to strive for the future.

It is forecast that wood exports will flourish when the CPTPP Agreement takes effect. Picture: Nguyen Thanh.

How the timber enterprises themselves have been taking steps to make good use of the opportunity from the CPTPP agreement?

Both Vifores as well as businesses are moving to take advantage of opportunities from the CPTPP Agreement. First of all, Vifores thoroughly explored the CPTPP Agreement and popularized the understanding of the agreement.

In fact, from last year to this year, there were at least 4 delegations of wood exporters to learn about the market of 10 countries in CPTPP. The markets such as Australia, New Zealand, Japan, businesses are quite familiar, so the process of understanding the market, especially companies in the South American countries such as Chile, Peru... companies try to understand the demand, consumer tastes of the market to have a long-term plan in the future.

In your opinion, in addition to the activities have been implemented, in the next time, what both processing enterprises, wood exporters and state management agencies need to coordinate and to note to "welcome" the effective CPTPP Agreement?

In the past, Vietnamese companies only implemented narrow-range FTAs. The CPTPP has a broader scope with many new features. Therefore, in addition to understanding the basic content of the CPTPP agreement, enterprises must also understand the international trade policy is changing day by day.

Currently, the issue of concern for enterprises in general, wood enterprises in particular is the foreign language. All documents related to FTAs ​​are mainly in English, less translated into Vietnamese. Specifically, the CPTPP is still in English. State management agencies must accompany the enterprises, in the short term to quickly edit the documents in the CPTPP Agreement in Vietnamese, in the form of easy-to-understand questions and answers to support enterprises. Enterprises should have specific legal documents guiding the implementation of the CPTPP. Enterprises just read the text to implement.

Thank you Sir!