Vietnam’s timber industry set to grow as FTAs ​​come into force

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February 16, 2022

HANOI — Vietnam’s wood and furniture products are expected to grow in 2022 due to the purchasing demand from the international market and satisfying the necessary factors in the Free Trade Agreements (FTAs).

Although it had a difficult year last year after being heavily affected by the pandemic, the country’s exports of timber and non-timber forest products in 2021 are expected to reach $15.6 billion, up 18% from compared to 2020. wood and products reached $14.5 billion, up 17.2% compared to 2020.

Việt Nam’s wood and forest products are exported to more than 140 countries and territories, the main markets of which are the United States, Japan, China, the EU and South Korea, with export value total estimated at 13.98 billion dollars, or 89.5% of national production. export value of forest products.

The move will give great impetus to the development of Vietnam’s wood processing and export industry with an export turnover value 20% higher than in 2021.

The gains are attributed to the effects of FTAs ​​such as the EU-Việt Nam Free Trade Agreement, the UK-Việt Nam Free Trade Agreement (UKVFTA), the Comprehensive and Progressive Trans-Pacific Partnership Agreement.

They have created favorable conditions for the development of Việt Nam’s agricultural industry, bringing advantages in access to difficult markets and increasing competition with similar agricultural products from other countries.

According to the Việt Nam Timber and Forest Products Association, last year the export of wooden furniture to the UK increased sharply with products for living rooms and dining rooms. They are followed by wooden furniture for the bedroom and wooden frame chairs.

With the entry into force of the UK-Việt Nam Free Trade Agreement (UKVFTA) in May 2021, the timber processing and export industry has seen import volume high in the market, reaching an export turnover of 5.24 billion dollars, an increase of more than 15% over 2020.

The UKVFTA agreement is driving Vietnamese wood processing and exporting companies to expand the market and diversify products to provide more choices to consumers.

Tạ Hoàng Linh, director of the Europe-America Market Department, said the UK is Việt Nam’s most important partner and sixth export market.

However, Vietnamese products imported into this market remain modest, accounting for only 1% of the total volume of goods imported into the UK. The UK still has plenty of room for Vietnamese agricultural products, including wooden products.

Over the year, Vietnamese timber processing and exporting enterprises have shown speed and flexibility in response to the COVID-19 pandemic to secure contracts with international customers.

According to the General Department of Customs of Việt Nam, the value of Vietnamese timber and wood products exports in 2021 to the Americas reached $9.3 billion, up 22% from 2020, and the US market to it alone accounted for $8.7 billion, another increase. 22% compared to 2021.

Ready to recover

Local economists predict that the global economy will gradually recover and grow again this year. Global consumption and foreign direct investment in Việt Nam will also increase. Technology and raw material initiatives available from local wood product manufacturers will become the driving force of the country’s wood sector.

Lê Minh Thiện, chairman of Bình Định Wood and Forest Products Association, said that during an economic recovery, the economy will undergo a process of adapting to new conditions affecting the industry.

In response to the COVID-19 pandemic, wood processing and exporting enterprises in Bình Định province have received many orders, but are also facing challenges, including a shortage of raw materials and accessories. , while the price of wood chips and pellets fell sharply.

There are still many difficulties and challenges such as shortage of raw materials, rising raw material prices, labor shortages and factory capacity. Logistics is also a big challenge when companies need to export goods but cannot find empty containers, disrupting the supply chain.

The Vietnam Timber and Forest Products Association and timber processing and exporting enterprises have worked with authorized agencies to minimize risks in sourcing imported timber materials to avoid trade fraud.

He suggested authorized agencies carefully consider FDI investments that pose a high risk to Vietnam’s timber industry.

Đỗ Xuân Lập, president of the association, said that despite the difficulties, the opportunities for Việt Nam’s furniture industry were wide open.

Companies themselves are aware of the great opportunity, so they have constantly sought ways to adapt to new conditions, from retaining workers and finding a stable source of raw materials, to applying machinery and modern equipment to reduce dependence on human resources, improved product quality and packaging and delivery services.

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