The year 2013 brought about big success for the wood industry whenexport revenues hit a record high of 5.7 billion USD. General Secretaryof the Vietnam Timber and Forest Products Association (Vifores) NguyenTon Quyen anticipated even brighter prospects for the woodworkingindustry this year with expected export revenues of 6.2 billion USD.
Hetalked to The Saigon Times Daily on the sidelines of a function inHanoi on February 18 when the EU announced funding of three millioneuros for wood-related projects in Vietnam.
*Exports sales ofmost farm products tumbled last year, but wooden furniture productsstill performed well. How do you comment on this?
In my opinions,2013 was a successful year for the woodworking industry whenagriculture suffered from low prices. However, export sales of woodenproducts fetched the highest-ever number of 5.7 billion USD, but ifother forestry products including handicraft and rattan-ware items areincluded, the amount almost hit 6 billion USD.
The US marketlast year recovered, consuming 1.7 billion USD worth of wooden productsimported from Vietnam, or a year-on-year rise of 16 percent. Exports tothe EU increased little, but shipments to Japan rose by some 200 millionUSD against 2012.
A major contributor is the Chinese market,which imported some 1 billion USD worth of wooden products from Vietnamcompared to 740 million USD in 2012. In addition, enterprises alsomanaged to penetrate new markets such as Russia, India and the MiddleEast.
*Does high export revenue also generate high profits?
Althoughthe export value was high, the profit margin and added values were notcorresponding due to high input prices last year, including fuel,electricity and labor costs. In addition, the spending on importedtimber to process furniture was also higher last year.
Furthermore,the growth of exports to China was high, but this market mainly boughtcrude or semi-processed timber products from Vietnam. This situation hasadverse impacts on the country’s woodworking industry.
*You saidexports to the EU did not grow strongly. How do you anticipate tradewith the EU this year when Vietnam joins the EU Action Plan of ForestLaw Enforcement, Governance and Trade (FLEGT)?
Major exportersof wooden products to the EU include China, Vietnam, Malaysia, andIndonesia, with China along fetching some 8-12 billion USD each yearfrom the market. However, furniture shipments from China to the EU hadbeen declining due to antidumping tariffs imposed by the EU, so manyChina manufacturers have shipped their products to Vietnam forprocessing and then exported them to the EU, using Vietnam as the originof products. Therefore, Vietnam replaced China in terms of furnitureexport value to the EU last year.
However, export sales to the EUremained modest, at some 800 million USD only, as local processors havebeen able to penetrate only four European markets, including Germany,France, the UK and Spain. If Vietnam’s products can penetrate all EUmarkets, the picture will be quite different.
It is expectedthat Vietnam will sign the Voluntary Partnership Agreement under FLEGTwith the EU this year, and in such a scenario, Vietnamese woodenproducts will benefit greatly from the agreement as local items will besubject to assistance of the EU and prices will be higher. However, itis difficult to make the most from this agreement as many local forestplanters, craft villages and traders are still not aware of theagreement to conform to legal requirements.
*How about the TPP and its impacts on Vietnam’s woodworking industry?
TheTrans-Pacific Partnership agreement is expected to be concluded thisyear, but it is still difficult to predict how it would impact thewoodworking industry. However, enterprises should quickly preparethemselves for the agreement. If we buy timber from markets outside TPPthat groups only 12 economies, it is sure that the tariffs will be highand requirements on the legality of materials will be more stringent.
Currently,Vietnam imports timber from some 40 countries worldwide and exportfurniture products to such countries as Japan, the US, New Zealand andCanada. If we buy timber from TPP countries, the tariff will be zero,but the question is whether there is sufficient materials for domesticwoodworking enterprises.
*Could you please comment on the export prospects for Vietnam’s wooden products this year?
Theassociation has tabled discussions with member enterprises, and hasregistered the target with the Ministry of Industry and Trade to earnsome 6.2 billion USD from wooden product exports this year. This targetis quite obtainable when signals have been positive so far and localenterprises have by now won contracts worth over 3 billion USD.-VNA
Hetalked to The Saigon Times Daily on the sidelines of a function inHanoi on February 18 when the EU announced funding of three millioneuros for wood-related projects in Vietnam.
*Exports sales ofmost farm products tumbled last year, but wooden furniture productsstill performed well. How do you comment on this?
In my opinions,2013 was a successful year for the woodworking industry whenagriculture suffered from low prices. However, export sales of woodenproducts fetched the highest-ever number of 5.7 billion USD, but ifother forestry products including handicraft and rattan-ware items areincluded, the amount almost hit 6 billion USD.
The US marketlast year recovered, consuming 1.7 billion USD worth of wooden productsimported from Vietnam, or a year-on-year rise of 16 percent. Exports tothe EU increased little, but shipments to Japan rose by some 200 millionUSD against 2012.
A major contributor is the Chinese market,which imported some 1 billion USD worth of wooden products from Vietnamcompared to 740 million USD in 2012. In addition, enterprises alsomanaged to penetrate new markets such as Russia, India and the MiddleEast.
*Does high export revenue also generate high profits?
Althoughthe export value was high, the profit margin and added values were notcorresponding due to high input prices last year, including fuel,electricity and labor costs. In addition, the spending on importedtimber to process furniture was also higher last year.
Furthermore,the growth of exports to China was high, but this market mainly boughtcrude or semi-processed timber products from Vietnam. This situation hasadverse impacts on the country’s woodworking industry.
*You saidexports to the EU did not grow strongly. How do you anticipate tradewith the EU this year when Vietnam joins the EU Action Plan of ForestLaw Enforcement, Governance and Trade (FLEGT)?
Major exportersof wooden products to the EU include China, Vietnam, Malaysia, andIndonesia, with China along fetching some 8-12 billion USD each yearfrom the market. However, furniture shipments from China to the EU hadbeen declining due to antidumping tariffs imposed by the EU, so manyChina manufacturers have shipped their products to Vietnam forprocessing and then exported them to the EU, using Vietnam as the originof products. Therefore, Vietnam replaced China in terms of furnitureexport value to the EU last year.
However, export sales to the EUremained modest, at some 800 million USD only, as local processors havebeen able to penetrate only four European markets, including Germany,France, the UK and Spain. If Vietnam’s products can penetrate all EUmarkets, the picture will be quite different.
It is expectedthat Vietnam will sign the Voluntary Partnership Agreement under FLEGTwith the EU this year, and in such a scenario, Vietnamese woodenproducts will benefit greatly from the agreement as local items will besubject to assistance of the EU and prices will be higher. However, itis difficult to make the most from this agreement as many local forestplanters, craft villages and traders are still not aware of theagreement to conform to legal requirements.
*How about the TPP and its impacts on Vietnam’s woodworking industry?
TheTrans-Pacific Partnership agreement is expected to be concluded thisyear, but it is still difficult to predict how it would impact thewoodworking industry. However, enterprises should quickly preparethemselves for the agreement. If we buy timber from markets outside TPPthat groups only 12 economies, it is sure that the tariffs will be highand requirements on the legality of materials will be more stringent.
Currently,Vietnam imports timber from some 40 countries worldwide and exportfurniture products to such countries as Japan, the US, New Zealand andCanada. If we buy timber from TPP countries, the tariff will be zero,but the question is whether there is sufficient materials for domesticwoodworking enterprises.
*Could you please comment on the export prospects for Vietnam’s wooden products this year?
Theassociation has tabled discussions with member enterprises, and hasregistered the target with the Ministry of Industry and Trade to earnsome 6.2 billion USD from wooden product exports this year. This targetis quite obtainable when signals have been positive so far and localenterprises have by now won contracts worth over 3 billion USD.-VNA
