Creating Local Sources for Exported Wood

Mr Doan Xuan Ha, Deputy Director of Agro-forestry Product Processing and Salt Industry under the Ministry of Agriculture and Rural Development, said Vietnam now has 720,000 hectares of forests to supply the local processing industry, but timber quality is low. Thus, they are mainly used to make plywood. The weakness of the forestry is that forestation only aims to increase forest coverage. Farmers lack advice to grow appropriate timber for the export processing industry. Most forest areas are growing eucalyptus and acacia. These trees are only used to make plywood and have low commercial value. Currently, Vietnam is importing eucalyptus and acacia timber at VND2.9 million and VND1.5 million per cubic metre, respectively. Local eucalyptus and acacia are sold only at VND600,000-650,000 per cubic metre because it is low quality, only suitable for making plywood and paper.

The Ministry of Agriculture and Rural Development’s goal of forestry development is to have 825,000 hectares of material wood area by 2020. If we focus on good quality trees and invest in this industry, we can supply timber for the local wood processing industry. To date, programmes to grow timber for the wood processing industry are being actively carried out. For example, Truong Thanh Furniture Corp (TTFC) is investing in 100,000 hectares of growth forest. Mr Vo Truong Thanh, Chairman cum General Director of Truong Thanh Furniture Corp, said his company will grow at least 5,000 hectares each year. TTFC bought 2,000 hectares of forest aged 4 – 6 years in central and highland region in 2007. This area can supply 50,000 cubic metres of timber a year over the next two years, meeting 50 per cent of TTFC’s six factories’ input demand. At present, TTFC has grown forest in Dak Lak, Dak Nong and Phu Yen provinces and received support from the Government, the Ministry of Agriculture and Rural Development and local authorities. TTFC is growing acacia trees on 50 per cent of area, eucalyptus on 40 per cent, and teak and sua trees on 10 per cent. From 2016 on, TTFC will be able to supply from 500,000 - 1,000,000 cubic metres of timber, meeting 20 - 30 per cent of domestic demand. “At that time, apart from supplying Truong Than factories, we will sell materials to other factories in the country,” Thanh said.

Truong Thanh’s investment is loudly applauded by authorities, but few companies follow suit. Many companies are hesitant because forest growing is very difficult, requires large sum of capital and takes a long time to recover investment capital; thus, it will affect business and production activities. In addition to growing trees, enterprises must protect their forests from illegal logging. Besides, natural calamities such as floods and fires also make investors hesitant. Actually, forest growing is a venture business. As a result, Vietnam has nearly 2,000 wood processors, but a few of them grow trees to ensure local supplies.

Consequently, forestation and timber production requires sound and timely instruction from central authorities and close cooperation between authorities and enterprises.