Forests Are Vast but Timbers Fall Short

Currently, lumber is the third largest traded commodity in the world, just after petroleum and coal. With nearly 12,000 product lines, logs are being used for various purposes. The development of global wood markets is a mixed blessing for Vietnamese wood processing industry. It is necessary to have an overview on world timber markets, assess their impacts, and find out good solutions. Vietnam Business Forum interviewed Mr Nguyen Ton Quyen, Vice President and General Secretary of Vietnam Timber and Forest Product Association (Vietfores), on this issue. Luong Tuan reports.

The main cause to the lumber shortage is resulted from the Government’s ban on logging. Currently, the Government allows logging 200,000 to 300,000 cubic metres of natural timbers a year. However, timbers from Vietnam's planted forests continue to growing up. According to the Vietnam Timber and Forest Product Association (Vietfores), Vietnam will have 7 million cubic metres of forest timbers at the end of 2011.

 

Although the volume of planted forest timbers is growing up, timbers used for woodworking account for just 15 - 17 percent while the rest is used for pulp production, particleboard, and chips. Processing forest lumbers into wood chips to be exported to foreign nations is becoming a headache for leaders of timber production and processing industry. As of end-September, up to 3 million tonnes of this product - an equivalent to 5 million cubic metres of planted forest woods, were exported. As people are allowed to manage and log forests, many Japanese, Chinese and Taiwanese companies have invested money for farmers to plant forests and purchased logs from them, thus timber shortfall persists although the forest area has been expanded continuously.

 

To be brief, the Vietnamese planted forest structure is irrational. Besides, policies discourage afforestation for furniture industry to a certain extent.

 

In fact, that is not the primary cause of this reality. In the fourth quarter of 2010, woodworking companies signed orders worth some US$4 billion to provide enough of work for 2011. Contracts signed in 2010 were subjected to price rates then but prices escalated in 2011, threatening to send many small and medium companies to loss if they comply with their orders. However, to maintain their current market shares and prestige, many still have to continue.

 

Importing timbers for domestic production has existed for 10 years. Annually, Vietnam imports some 4 million cubic metres of timber and the volume is forecast to keep going up in the coming years.

 

However, timber import is now facing new challenges because the United States and the European Union adopted sustainable development programme in 2008 and required us to comply with their rules if we wanted to export our wooden products on these markets. Accordingly, we have to prove the origins of wooden products exported to these markets. All wooden products imported by these markets must have all required documents to be legal. Nonetheless, for the time being, not all countries have sufficient documents to certify the source of logs. Typical examples include Laos, Cambodia and some African nations. These requirements force Vietnamese woodwork exporters to choose timbers with clear origin and prices will thus go up. For instance, Vietnam now is buying acacia woods from Malaysia and the price for a cubic metre of timbers without certificates of origin is roughly US$100 but the price for a cubic metre of timbers with certificates of origin is US$170.

 

With new regulations, Vietnamese woodwork exporters must raise their awareness and responsibility and constantly update new international requirements to avoid unnecessary damage that may occur.

 

Currently, only three or four wholly Vietnamese-invested woodwork companies are capable of directly negotiating with foreign partners to provide products and ensure the origin of their products in accordance with international regulations. Such requirements are easily satisfied by foreign firms because they are familiar with such practices, have distribution markets in these markets, and can compete with other rivals.