Wood export market shows many signs of recovery

This is the information given by Mr. Do Xuan Lap - Chairman of the Vietnam Timber and Forest Products Association at the Conference "Wood processing, wood and forest product export in 2023" held on the afternoon of August 9, in Binh Duong.

Where are the 5 main export markets for Vietnamese wood?

According to the report of the Department of Forestry ( Ministry of Agriculture and Rural Development ), the export value of forestry products in the first 7 months of 2023 is estimated at 7.78 billion USD, down 25.5% over the same period in 2022. Of which, wood and wood products reached 7.21 billion USD, down 26.2%; non-timber forest products 580 million USD, down 15.4%.

Enterprises participate in booths at "Binh Duong International Wood Machinery and Materials Fair 2023"

The US, Japan, China, EU and South Korea continue to be the main export markets for Vietnamese forest products. The total export value to these five markets in the first 7 months of 2023 is estimated at 5.44 billion USD, accounting for 89% of the country's total export value, of which: the US 3.1 billion USD, down 39.8%, Japan 834.3 million USD, down 4.8%, China 701.1 million USD, down 26.3%, EU (including UK) 425.5, down 33.7%, South Korea 410.3 million USD, down 24.9%.

Mr. Trieu Van Luc - Deputy Director of the Department of Forestry said that the sharp decrease in the export value of wood and forest products in the first 7 months of 2023 was due to high inflation (over 8%) in some of Vietnam's main forest product exporting countries such as the United States and the EU, so the Government issued many monetary tightening policies, consumers tightened spending, reduced purchases of non-essential products, including wood products.

Wood chip prices have dropped from $195/ton in 2022 to $135/ton in the first 7 months of 2023; wood pellet prices have dropped sharply from $180/ton in 2022 to $100/ton in the first 7 months of 2023.

The geopolitical conflict (Russia - Ukraine) continues to develop complicatedly, affecting the production and business activities of enterprises such as: Logistics costs, raw wood prices, and input production materials all increase.

Protectionist policies of countries continue to be promoted to protect domestically produced products and goods; thus, affecting the commercialization of Vietnamese wood products.

Trade defense between countries has many complicated developments. The wood industry faces trade lawsuits, typically anti-dumping tax evasion investigations on plywood, kitchen cabinets and dressing tables in the United States.

From the business perspective, Mr. Do Xuan Lap - Chairman of the Vietnam Timber and Forest Products Association commented that the export turnover of wood and wood products of domestic and FDI enterprises both decreased compared to the same period in 2022.

The Government's policy is to reduce interest rates for businesses and assign the State Bank to direct commercial banks, but so far commercial banks have not fully implemented this policy. Businesses have not received notice of interest rate reduction for old loans, mainly only applied to new loans.

“Regarding credit limits, depending on the reputation and orders of the business, banks have different credit limits. However, banks only apply loans when there is an order and assess the risk of this order,” Mr. Do Xuan Lap shared.

Regarding value added tax refunds, up to now, the results of delayed tax refunds of wood industry enterprises have not improved significantly.

Currently, the exploitation, trade and transportation of wood in the country is carried out according to Circular 26/TT-BNNPTNT. However, up to now, when exporting enterprises request verification of wood origin according to regulations, they still face difficulties, as they can only verify the product list but not the forest grower, causing difficulties in the process of applying for a Certificate of Origin (C/O) when exporting.

Some provinces/cities apply verification of forest product lists through the national public service portal, which is not feasible when forest growers are in remote areas and cannot update technologies...

Promote trade promotion and marketing of Vietnamese wood products.

Besides objective and subjective difficulties, Mr. Do Xuan Lap said that there are now signs of economic recovery in markets importing Vietnamese wood and wood products such as the US market.

The US Department of Commerce announced that GDP growth (3rd revised figure) was 2%, up from 1.3% announced in May and 0.3% higher than analysts' forecasts. The new data contributed to making the US economic picture in the first period of the year more positive.

At the same time, in mid-July, the US Department of Commerce (DOC) announced a preliminary decision to investigate anti-dumping and anti-subsidy on Vietnamese hardwood plywood products exported to this market.

Therefore, it is predicted that the export of this product to the US market will grow again. Market factors are the concern of the wood industry at this time.

At the conference, Mr. Do Xuan Lap also recommended that the Ministry of Agriculture and Rural Development should organize negotiations to unify regulations on traceability of legal timber origin in import markets. This is an urgent requirement in the coming time to promote sustainable development of planted forest timber. At the same time, it is necessary to pilot a model of business development towards a green economy, aiming towards a Net Zero commitment in the wood industry.

Regarding market opening and export promotion activities, Mr. Do Xuan Lap suggested that the Government and ministries direct diplomatic agencies abroad to increase support for the import and export business community.

Specifically, promote and introduce information about Vietnam's efforts in committing to and implementing policies to protect forests and the environment in the use of raw materials and production of exported wood products.

Promote and market Vietnamese wood export products to markets, focusing on potential markets where consumers lack information about Vietnamese wood products, through international meetings, conferences and seminars.

Organize guidance and connections to support domestic export enterprises to participate in industry associations in countries importing Vietnamese wood products.

Support businesses with specific funding to participate in international fairs, especially support businesses to open stores and companies in large markets with specific solutions in administrative and monetary procedures related to foreign investment.

At the same time, it is recommended that the Ministry of Finance coordinate with the Ministry of Agriculture and Rural Development and the Ministry of Industry and Trade to organize a dialogue conference with wood exporting enterprises to find solutions to remove difficulties in VAT refunds and in verifying and tracing the source of domestically grown wood.

Reduce and eventually restrict the import of uncertified natural forest timber, especially in high-risk geographical areas.

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