The year 2013 brought about big success for the wood industry when export revenues hit a record high of 5.7 billion USD. General Secretary of the Vietnam Timber and Forest Products Association (Vifores) Nguyen Ton Quyen anticipated even brighter prospects for the woodworking industry this year with expected export revenues of 6.2 billion USD.

He talked to The Saigon Times Daily on the sidelines of a function in Hanoi on February 18 when the EU announced funding of three million euros for wood-related projects in Vietnam.

*Exports sales of most farm products tumbled last year, but wooden furniture products still performed well. How do you comment on this?

In my opinions, 2013 was a successful year for the woodworking industry when agriculture suffered from low prices. However, export sales of wooden products fetched the highest-ever number of 5.7 billion USD, but if other forestry products including handicraft and rattan-ware items are included, the amount almost hit 6 billion USD.

The US market last year recovered, consuming 1.7 billion USD worth of wooden products imported from Vietnam, or a year-on-year rise of 16 percent. Exports to the EU increased little, but shipments to Japan rose by some 200 million USD against 2012.

A major contributor is the Chinese market, which imported some 1 billion USD worth of wooden products from Vietnam compared to 740 million USD in 2012. In addition, enterprises also managed to penetrate new markets such as Russia, India and the Middle East.

*Does high export revenue also generate high profits?

Although the export value was high, the profit margin and added values were not corresponding due to high input prices last year, including fuel, electricity and labor costs. In addition, the spending on imported timber to process furniture was also higher last year.

Furthermore, the growth of exports to China was high, but this market mainly bought crude or semi-processed timber products from Vietnam. This situation has adverse impacts on the country’s woodworking industry.

*You said exports to the EU did not grow strongly. How do you anticipate trade with the EU this year when Vietnam joins the EU Action Plan of Forest Law Enforcement, Governance and Trade (FLEGT)?

Major exporters of wooden products to the EU include China, Vietnam, Malaysia, and Indonesia, with China along fetching some 8-12 billion USD each year from the market. However, furniture shipments from China to the EU had been declining due to antidumping tariffs imposed by the EU, so many China manufacturers have shipped their products to Vietnam for processing and then exported them to the EU, using Vietnam as the origin of products. Therefore, Vietnam replaced China in terms of furniture export value to the EU last year.

However, export sales to the EU remained modest, at some 800 million USD only, as local processors have been able to penetrate only four European markets, including Germany, France, the UK and Spain. If Vietnam’s products can penetrate all EU markets, the picture will be quite different.

It is expected that Vietnam will sign the Voluntary Partnership Agreement under FLEGT with the EU this year, and in such a scenario, Vietnamese wooden products will benefit greatly from the agreement as local items will be subject to assistance of the EU and prices will be higher. However, it is difficult to make the most from this agreement as many local forest planters, craft villages and traders are still not aware of the agreement to conform to legal requirements.

*How about the TPP and its impacts on Vietnam’s woodworking industry?

The Trans-Pacific Partnership agreement is expected to be concluded this year, but it is still difficult to predict how it would impact the woodworking industry. However, enterprises should quickly prepare themselves for the agreement. If we buy timber from markets outside TPP that groups only 12 economies, it is sure that the tariffs will be high and requirements on the legality of materials will be more stringent.

Currently, Vietnam imports timber from some 40 countries worldwide and export furniture products to such countries as Japan, the US, New Zealand and Canada. If we buy timber from TPP countries, the tariff will be zero, but the question is whether there is sufficient materials for domestic woodworking enterprises.

*Could you please comment on the export prospects for Vietnam’s wooden products this year?

The association has tabled discussions with member enterprises, and has registered the target with the Ministry of Industry and Trade to earn some 6.2 billion USD from wooden product exports this year. This target is quite obtainable when signals have been positive so far and local enterprises have by now won contracts worth over 3 billion USD.-VNA