Investments

“Positive Growth, Wood Industry Seizes Opportunity to Conquer $15.2 Billion Target”

The road to achieving the timber and forest product export target of $15.2 billion by 2024 will be challenging, according to experts. They believe that the industry will face numerous obstacles and require a concerted effort from businesses within the sector to overcome these hurdles.

Administrator

4 September, 2024

Workers at a wood manufacturing company. (Photo: Vu Sinh/VNA)

With a growth rate of over 20% and positive recovery signals from the market, wood and wood product exports are expected to thrive in the final quarter of 2024.

However, experts believe that achieving the 2024 wood and forestry export target of 15.2 billion USD will not be without challenges, requiring concerted efforts from the industry.

Mr. Tran Quang Bao, Director of the Department of Forestry under the Ministry of Agriculture and Rural Development, shared that the wood and wood product export market is witnessing encouraging recovery signals, especially with all key export products on the rise: wood pellet exports increased by nearly 38%, while wood and wood product exports surged by over 20% compared to the same period in 2023.

Consequently, in the past seven months, the export value of wood and forestry products reached an estimated 9.36 billion USD, marking a 20.5% increase compared to the same period in 2023. Notably, the US market witnessed a 24% growth.

To address the setbacks of 2023, associations and wood processing enterprises have proactively approached production and sought export markets since the beginning of this year. A series of trade fairs to attract customers to Vietnamese wood products were organized in key production localities such as Ho Chi Minh City, Binh Dinh, and Binh Duong.

Mr. Tran Quang Bao asserted that the global economy in 2024 will continue to face challenges due to high-interest rates, trade tensions, military conflicts, and political instability. These factors could potentially impact the demand for wood and wood products in the coming months. Vietnam’s primary wood export markets, including the EU, the US, Japan, and South Korea, are confronting economic hardships and protectionist policies.

“In the US market, the country has concluded its investigation into anti-circumvention duties on wooden cabinets and dressing tables from Vietnam. However, in the future, the US will strengthen control and post-inspection of these items. Simultaneously, the US will continue to support its domestic businesses by intensifying trade defense measures through anti-dumping and countervailing duty investigations,” analyzed Mr. Tran Quang Bao.

According to the Vietnam Timber and Forest Product Association, the US is a crucial market for the Vietnamese wood industry, accounting for approximately 54% of the sector’s total export value. Nevertheless, the US market alone has seen three lawsuits against Vietnamese wood products, in addition to cases from South Korea and Canada.

Mr. Do Xuan Lap, Chairman of the Vietnam Timber and Forest Product Association, pointed out that the US Department of Commerce has not recognized Vietnam as a market economy. Consequently, Vietnamese enterprises exporting goods to the US will continue to face discrimination in anti-dumping and countervailing duty investigations. The actual production costs of Vietnamese companies remain unrecognized, and a “substitute value” from a third country is used to calculate the dumping margin.

Regarding the South Korean market, the Korea Trade Commission recently concluded its investigation and decided to continue imposing anti-dumping duties on Vietnamese wood veneer products for the next five years, ranging from 9.78% to 32.28%.

As for the EU, the European Union Timber Regulation (EUTR), which will come into effect in December 2024, presents both opportunities and challenges for Vietnamese wood enterprises. According to Mr. Le Minh Thien, Chairman of the Binh Dinh Timber and Forest Product Association, if businesses in the wood industry effectively comply with this regulation, their competitiveness in the EU market will improve, and the volume of wood products exported to this market will increase. Conversely, failure to adhere to the EUTR will result in their goods being blocked from entering the EU market, essentially excluding themselves from the global supply chain.

The upcoming holiday season in many countries is expected to boost wood and wood product exports even further. Nevertheless, the volatile global situation and the surge in shipping and logistics costs will significantly impact the orders of the Vietnamese wood industry.

Wood product manufacturing for export in Binh Duong province. (Photo: VNA)

Regarding the wood industry’s future direction, Mr. Do Xuan Lap emphasized the need for enterprises to focus on enhancing their competitiveness based on five main pillars: production technology and techniques; emission reduction; governance (digital transformation); trade promotion; and the development of internal monitoring standards.

Mr. Nguyen Liem, Chairman of the Binh Duong Furniture Association (BIFA), assessed that the positive growth of wood and wood product exports is a commendable achievement for Vietnam’s wood industry amid numerous challenges. However, to ensure sustainable growth and development, wood enterprises must proactively adapt to diverse conditions and circumstances, thereby implementing flexible adjustments in production, business operations, and exports. Emphasizing the importance of technology development and supply chain enhancement, from raw materials to logistics, is crucial.

Bich Hong