Amid the world’s growing demand for wood products and with many key foreign markets tightening their wood material exports, Vietnam’s wood industry may reach a new record export turnover of US$9 billion this year, thanks to firms’ purchasing the materials from new markets.
After spending nearly US$200,000 on importing a modern production chain in late 2018, locally-owned X26 Joint Stock Company in Hanoi has earned approximately US$1.2 million in revenue, over the past four months, from exporting its furniture products, up 10% annually.
“The figure is expected to be roughly US$5 million for the whole year,” Nguyen Viet Thang, head of the firm’s Planning Department, told Nhan Dan Online.
Nguyen Ton Quyen, vice chairman of the Timber and Forest Product Association of Vietnam (Vifores), told Nhan Dan Online that the X26 company is just one among many wood firms in Vietnam that are seeing bright prospects. Vifores has received reports from many wood exporters in Vietnam.
“Eighty percent of hundreds of exporters have landed big export contracts until the year’s end,” Quyen said. “The domestic wood industry is projected to hit a record export turnover of approximately US$9 billion this year, up from last year’s record US$7.6 billion.”
In April, the industry enjoyed a record export turnover of US$750 million, raising the four-month turnover to a record US$2.65 billion.
Wood Land, one of Vietnam’s biggest wood product exporters, is reported to have signed export contracts for the whole year, with an expected turnover of US$55 million this year, up from US$50 million last year.
In another case, Nam Dinh Nafoco JSC has also landed export contracts for the entire 2018, with a forecast turnover of US$50 million this year, up from US$45 million last year.
Many other firms such as Tien Dat, Dai Thanh, Cancia Pacific, Hiep Long, Minh Phat and Phu Tai, which are located in the central and southern regions of the country, have also signed 80% of the contracts for the whole of 2018. They are also expecting an export turnover of US$30-50 million this year, up 10-15% annually.
While enterprises’ production is improving, the global demand for Vietnamese wooden products has been strongly rising, focusing on key markets including the US – which imports 43% of Vietnam’s total wood exports, with China at 14%, Japan (14%) and the Republic of Korea (over 10%). Periodically, the export has tended to strongly increase in a year’s fourth quarter, while demand from these key markets has risen 20% a year.
“We have been seeking new export markets, such as Qatar, Australia and Cameroon, whose demand for Vietnamese products has been climbing by 20% since early this year,” Quyen said. “In addition, many firms have boosted their export of medium-density fibreboard (MDF), with total turnover of over US$250 million.”
Lack of materials
For example, Laos, which used to export nearly one million cubic metres of round timber to Vietnam per year, has decided to stop the export of timber materials under the nation’s governmental Decree 15 on banning the export of raw timber, issued in May 2017.
“The decree has almost curbed all timber supplies from Laos for Vietnam. The volume of round timber has reduced from 322 m3 in 2015 to over 36,000 m3 in 2016. The figure sat at nearly 6,000 m3 in the first half of the year,” said the report.
In another case, although Cambodia remains a big source of timber materials, the source is unstable and difficult to forecast, while Cambodia’s government is planning to more strictly control the country’s timber exports.
“Thus, at least in the short term, this source will likely contract,” the report noted.
Also according to the report, timber supplies from Papua New Guinea and Africa are facing certain issues in terms of the quality and legality of timber, which will also affect Vietnam’s wood production and exports in the years to come.
A way out
However, Vifores and other firms have been working with many partners in the US, France, Finland and some other EU nations, Japan, and New Zealand concerning wood material supplies.
“These are Vietnam’s new wood material suppliers. They even came to Vietnam to seek supply contracts with the firms. In spite of the higher prices, materials from these markets have higher quality and a clearer origin,” Quyen said.
Nguyen Viet Minh, director of Binh Minh Hanh Furniture JSC in the south-central province of Binh Dinh, told Nhan Dan Online that this firm’s export turnover hit US$5.5 million last year – up about 17% against 2015, and about US$3 million in this year’s first four months, up 20% annually.
“We expect the figure will be approximately US$7-7.5 million this year. We will continue to seek more export markets, in addition to our existing markets of Japan and the US, so that we can reach our target of US$10-13 million by 2020,” Minh said.
Currently Minh is working with a number of Japanese and European partners to purchase wood materials.
“They are offering prices 15-20% higher than our existing suppliers, but the quality of their wood materials is better,” he said.
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