Vietnamese wood processors seek support

Jul 08, 2009. /Lesprom Network/. The domestic wood processing industry, the country’s fifth largest hard currency earner, needs more support from the Government, industry associations and companies to reach its export value target for 2009-10, industry insiders have said, according to Vietnam News. In spite of high growth in recent years, Vietnamese wood processors have had fewer orders this year because of the global downturn, said Nguyen Ton Quyen, chairman of the Viet Nam Timber and Forestry Products Association. Viet Nam has about 2,520 wood processing establishments, of which 420 are foreign-invested, according to the association. The export target for this year is $3.2 billion for 2010. Thanks to last year’s export value of $2.8 billion, the industry became the fifth largest wood product exporter in the world after mainland China, Malaysia, Indonesia and Thailand. Vietnamese wood furniture products are exported to 120 countries, of which the US imports up to 30 per cent of the country’s total wood furniture and forestry product value. The US is Viet Nam’s biggest importer of wood products, with the EU and Japan together representing 55 per cent of imports. Among the many local wood exporters, Khai Vy is one of the most successful, with four plants employing 4,800 workers and exporting more than 500 containers of wood furniture each month. Despite the success of last year, the global recession has lowered the purchasing power of the US and EU markets by 30 per cent, and as a result fewer export contracts have been signed. A representative of the southern Binh Duong Province’s Department of Trade and Industry said that about 95 per cent of Viet Nam’s wood furniture exporters faced difficulties because their partners had canceled or reduced import orders. Contracts have fallen between 30 per cent and 60 per cent recently, compared to the same period last year, putting many companies on the brink of bankruptcy. Quyen also said that only 50 per cent of those involved in the wood processing industry could withstand the downturn and the remaining half were in a danger of bankruptcy or experiencing severe hardships. Cung Quang Binh, director of the Binh Nguyen Wood Furniture in northern Bac Ninh province, said his company exported all of its products to China but over the last few months, the market became frozen. "To survive, we have had to reduce the number of employees from 100 to 40," Binh said. Bac Ninh province has more than 300 wood processors, most of which are making wooden handicrafts. In previous years, they could earn $50 million in export value annually, but the figure has dropped 70 per cent this year, according to Nguyen Van Khanh, chairman of the Bac Ninh Timber Association. Industry insiders said that to realise the export value targets, the Government should temporarily stop collecting export taxes on wood products during a time when the market is fluctuating wildly. Wood processors’ debts should also be extended and the Government should allow wood processors to pay less in corporate income taxes or delay their payments. In addition, companies should be provided with easier access to loans to have enough working capital for production activities. Industry insiders said the Government must have more preferential policies to encourage domestic and foreign enterprises to invest in the wood industry to modernise production technology and improve the quality of products. The timber association has been asked to strengthen trade promotion activities and therefore create opportunities for domestic wood enterprises to penetrate new overseas markets. The association should encourage each company to be responsible for one process, including wood material supply, production or export. To ensure sustainable development, experts said wood enterprises must pay more attention to the domestic market to fully tap its potential, particularly when export markets are soft. A recent survey of 210 families in urban areas made by the timber association shows that each Vietnamese family spent VND3 million ($166) on average for wood products per year while guesthouses and hotels paid VND12 million and 30 million, respectively. The number of new guesthouses and hotels increases year after year, requiring large volumes of wood products, Quyen said.