Binh Dinh Timber Industry: Striving for Stable Growth

Binh Dinh province’s woodwork exports reached US$447 million in 2011, up 4 percent year on year, despite mounting difficulties. Wood companies managed to maintain stable operations and make positive strides in business. At present, they are working through difficulties to realise business and export plans in 2012.

 

Mr Nguyen Kim Phuong, Director of the Department of Industry and Trade of Binh Dinh Province, said: In 2011, the domestic economy was hurt by global financial crisis and economic downturn. Meanwhile, local businesses, most of which are small and medium, have weak competitiveness, low production capacity and insufficient working capital. Many are late at changing equipment and technologies to improve production capacity and product quality. Their limited advertisement, trade promotion, branding and international quality management system construction result in low competitiveness for their exports. Operations of local industry associations are ineffective and uncoordinated, a disadvantage for local businesses when purchasing materials and exporting products. Some even do not pay proper attention to developing skilled human resources and applying employment policies.

 

Refined woodworks generate nearly 50 percent of the province’s total export turnover. Outdoor products account for 94 percent, mainly exported to European countries, and indoor furniture contributes just 5.2 percent. Hence, market fluctuation and weather conditions directly affect export earnings. Many wood companies are in dire situations. According to the Department of Industry and Trade, in 2011, export value of PISICO Corporation was just US$6 million, down 19.3 percent from 2010; Tien Dat Company pulled in some US$29.7 million, down 13.2 percent; Dai Thanh Company earned US$12.9 million, down 15.8 percent; Tri Tin Company fetched nearly US$8.9 million, down 18 percent; and My Tai Company recorded over US$5.3 million, down 31.2 percent.

 

However, thanks to stimulus policies of the central government, instructions of local authorities and efforts of businesses in the last months, the province’s exports were estimated at US$447 million in 2011, equal to 97.2 percent of the full-year plan and up 4 percent from 2010. In particular, agricultural products brought in US$82 million, up 18.4 percent year on year; minerals and construction materials generated US$48.8 million, up 70.6 percent; and industrial consumer and processed goods made US$28 million, up 31.7 percent.

 

According to economic experts, in 2012, global economies remain volatile. Negative impacts of global financial crisis and economic slowdown will continue to adversely impact the domestic economy. Therefore, enterprises’ production, business and export activities will also continue to face numerous difficulties and challenges. Mr Phuong said that the Department of Industry and Trade is determined to bring export turnover to approximately US$480 million in 2012, up 9.1 percent over 2011.

 

To achieve this result, the Department of Industry and Trade has put forth a number of fundamental programmes and solutions. First of all, the province will effectively implement monetary and financial policies in accordance with the Government’s Decree 75/2011/ND-CP on investment and export credit. It will also enact policies in support of local wood companies, particularly interests on loans used to purchase materials. It will also urge local enterprises to invest in equipment, technological renovation, export product diversification and branding. Local enterprises will be supported to turn out products of local advantages to edge up competitiveness. Besides, they must be more active in export activities, proactively addressing technical barriers in importing nations, exploiting existing markets and searching for new ones.

 

 The Department of Industry and Trade will direct its affiliated units and local enterprises to boost trade promotion, expand export markets, and promote the roles of industry associations and business clubs. It also encourages local industry associations to follow the guidance of central industry associations and join national trade promotion programmes. It mobilises enterprises to use national electronic information portals and electronic furniture exchanges.

 

In addition, the central government should have policies to reschedule debts and reduce interest rates applied to loans used to purchase materials because current rates are too high. Commercial banks should continue considering an increase in lending value and maturity for local companies. They need to give priority to trusted companies serving as major timber importers to reduce costs and eradicate unhealthy competition. Banks need to continue implementing monetary and financial policies in accordance with Government Decree 75/2011/ND-CP on investment and export credit to support capital for enterprises.