Vietnam's wood industry faces difficulties in the EU market

According to the Vietnam Timber and Forest Products Association, in 2023, the export turnover of wood and wood products is estimated to reach about 13.5 billion USD, down 15.5% compared to 2022.

Traditional craft village specializing in producing worship items in Binh Cau (Bac Ninh province). Photo: Thanh Thuong-VNA

Mr. Do Xuan Lap, Chairman of the Vietnam Timber and Forest Products Association, said that 2023 is a challenging year for the Vietnamese wood industry. Consumer demand in major export markets such as the US and the European Union (EU) has decreased sharply, leading to a drop in orders. Many businesses have had to reduce production scale. Some businesses have even had to close.

Meanwhile, some major export markets such as the EU are tightening regulations on product legality and sustainability. Specifically, in the EU Deforestation Regulation (EUDR), which will come into effect from the end of June 2023, the bloc requires products imported into the EU market to ensure legality and not cause deforestation. In addition, regulations both domestically and in export markets on reducing carbon emissions in activities throughout the supply chain to achieve carbon neutrality are increasing. Products with high carbon content will lose competitiveness in the market.

On the other hand, currently, each year, Vietnam imports about 1.5 to 2 million m3 of round wood and sawn timber originating from tropical countries, accounting for 30-40% of the total imported raw wood. This type of wood has high legal risks. This not only negatively impacts the image of the entire Vietnamese wood industry, but also eliminates the opportunity to use low-risk imported wood and especially domestic plantation wood sourced from millions of farming households.

Mr. To Xuan Phuc, Executive Director of the Forestry Policy, Trade and Finance Program - Forest Trends Organization, said that about 77% of total export turnover to the EU are items in the wooden furniture group (HS 9401 and HS 9403), while the remaining nearly 23% are items in the wood and semi-raw material group (HS 44). In the first 11 months of 2023, the export turnover of wood and wood products to the EU market decreased by 32% compared to the same period. EUDR will have a significant impact on the export turnover of Vietnamese products to this market.

Vietnamese wood processing enterprises participate in fairs abroad. Photo: Thanh Tung/VNS

Meanwhile, Vietnam and the EU have signed a Voluntary Partnership Agreement on Forest Law Enforcement, Governance and Trade, in which Vietnam commits that all timber products exported to the EU are legal.

“Currently, Vietnam is actively internalizing laws and building a legal timber assurance system to control the entire supply chain, including domestic and export supply chains,” said Mr. To Xuan Phuc.

For 2024, Mr. Do Xuan Lap commented that the market has shown some signs of recovery but there are still some potential difficulties for the Vietnamese wood industry. The most important solution in 2024 is to create an image of a sustainable development of the Vietnamese wood industry, based on the basic factor of using certified wood and products that reduce emissions./.

Vu Hoa