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Wood exports at $7.3 billion

Released at: 14:30, 21/12/2016

Wood exports at $7.3 billion

Photo: AKVietnam/Illustration

Wood and wooden products exports increase just 1 per cent this year against 2015.

by Huyen Thanh

Wood and wooden product exports stood at $7.3 billion this year, a slight year-on-year increase of 1 per cent, according to the Vietnam Administration of Forestry (VAF) under the Ministry of Agriculture and Rural Development (MARD).

Wooden product exports were $5.27 billion, up 5 per cent year-on-year, while woodchip exports were estimated at $650 million, down 39 per cent year-on-year.

Mr. Nguyen Ba Ngai, Deputy Director General of VAF, said that in 2016 the value of forest and wooden product exports grew 5-10 per cent compared to 2015 but the value of wood and wooden exports grew just 1 per cent against 2015. The reason is the decline in the value of woodchip exports, which is equal to 61 per cent of its 2015 value.

The decline in woodchip exports came from lower global demand, particularly in China. Vietnam’s woodchips also faced competition in price with countries such as Thailand, Australia and some African nations.

The country’s wood industry is expected to earn total export value from wood and wooden products of $7.7 billion this year, higher than the $7.1 billion recorded in 2015.

Last year Vietnam recorded total export value from wooden and forestry products of $7.1 billion, an 8 per cent increase against 2014. Its three largest export markets were the US, Japan and China, accounting for 67 per cent of the total value.

Export markets with high value last year included India, with growth of 64.45 per cent, Hong Kong with 41.95 per cent, the US with 17.8 per cent, and Germany with 10 per cent. The increase in export value was due to high demand in global markets.

The US needs to import wooden products worth $27 billion each year while Vietnam exports between $1 billion and $2 billion of such products each year. The EU market has demand for wooden products worth $85 billion but Vietnam’s export value to the EU stands at just $700 million to $800 million annually.

Once the Voluntary Partnership Agreement on Forest Law Enforcement, Governance and Trade (VPA/FLEGT) comes into force, there will be opportunities for Vietnam to export more wooden products to Europe and other new markets as well as earn higher prices, according to the EU Delegation to Vietnam.

The pact will increase the competitiveness of Vietnamese timber products compared to those from countries that do not have much control over their forestry sector.

A VPA is a voluntary trade agreement between the EU and countries making wooden products, to promote trade in legal timber and help ensure only legally-harvested timber is imported into the EU from these countries. The EU and Vietnam finished negotiating a VPA on November 18 and an agreement is expected to be signed in early 2017.

According to the Ministry of Industry and Trade, under the agreement the country will create a timber legality assurance system (TLAS) in line with the country’s circumstances and the EU’s requirements for identifying the origin of timber. The full operation of the TLAS would significantly contribute to identifying the origin of Vietnamese timber products exported to the EU and other markets.

Once the VPA is fully implemented, the country will issue FLEGT licenses for exports of wooden products to document that they meet all relevant local laws. If a license is in place, EU companies don’t have to conduct any due diligence.

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