Published On: Tue, Jun 29th, 2010

Wooden furniture export is changing vigorously with challenges

Expected to be the industry that brings the top turnover in Vietnam’s top export in 2010, wood industry is moving with the positive export figures.

Besides, new difficulties are arising requiring firms and relevant authorities to strive and put in much more effort.

Turnover increased by nearly 35 percent.

According to statistics from customs sector, since early this year, wood export is estimated at $1.5 billion, up 35 percent compared to the same period of 2009.

The value of placed orders that firms have received is currently estimated at over $3 billion, up about $320 million over the same period of 2009, and ensuring to have operating orders until the end of 2010.
Evaluation of Vietnam Timber and Forest Products Association (Viforest) shows that although raw material prices are going up, but since most firms have managed to store up, it would not affect the production progress.

After two years experiencing difficulties, many firms now can sign with relief and dream for the similar “splendid time” as in seven and eight years ago.

Viforest vice general Secretary Hoang Canh said that the volume from signed orders of firms enables them to fulfil their yearly targets.
Particularly, exports to the US to the end of 2010 are estimated to increase by nearly 10 percent compared to last year. Other familiar markets such as Japan and the EU have also shown signs of recovery with orders increasing in both volume and value.

Turnovers of many businesses at the end of June are estimated equal to or more than that of entire 2009. The international timber fair held by Viforest has attracted three times larger in the number of visiting businesses than the previous fair. In addition, the price of timber products has also risen by three to five percent, contributing to profits increase for businesses, said Canh.

Challenges exist

According to commitments with WTO, in 2010, import tax rate on Vietnam timber products is at 10 percent. At the same time, as mentioned in Tax Law on Natural Resources, depending on types, timber will be imposed the rate ranging from 10 to 40 percent.

However, there is concern on the business capacity, while only 190 out of a total of 2,500 businesses have Certificates of Competency (CoC) which are needed to export products to two big markets such as the US and Japan.

From June 2010, Lacey Act took effect and business authorities have asked the US to assist and provide update information to help businesses to abide.

When exporting products to those markets, businesses must clarify the origin of the wood used to make products. In addition, they have to provide detailed and correct information such as the chemical used in each types of fabric used in the products, following a form provided by the US. If false declarations found, businesses will be fined heavily.

Trinh Minh Anh, deputy head of the Office of the National Committee for International Economic Cooperation, said that the US combines trade with environmental issues and considers this as an act but in fact, this is just another non-tariff barrier.

Furthermore, the vibrant export market has pushed up the prices of raw materials. According to Ministry of Industry and Trade, the price of rubber wood has increased continually in the last months by 20 to 30 percent, while import wood price from the main markets such as the US, New Zealand has also risen by 20 to 30 percent.

In 2010, timber demand for paper and plank processing is estimated to increase by 40 percent and such timber types as rubber wood, acacia and eucalyptus will be in the top of price increasing.

Currently, Vietnam businesses have to import 80 percent of raw materials. In addition, while having to cope with increasing import price of raw materials, the businesses also have to face with fierce competition at home from Chinese firms who are stepping up purchasing raw materials, said Canh.


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