Woodchip exports tumble, numerous difficulties remain

Hanoi (VNA) – Woodchip exports in the first five months of 2016 were posted at 248 million USD, compared to 430 million USD during the same period last year, a fall blamed on multiple difficulties.

A workshop in Hanoi on July 15 looked into new challenges to Vietnam’s woodchip exports.

The Vietnam Timber and Forest Product Association attributed the drop to the recent price nosedive in the global market, along with the decline in demand in China – the world’s biggest woodchip consumer.

Meanwhile, Vietnam has levied a tariff rate of 2 percent on woodchip exports to reduce the overseas shipment of this commodity.

To Xuan Phuc, a representative of non-profit organisation Forest Trends, said the imposition of this tax rate amid excessive supplies and shrinking demand has added a further complication to the export woodchip processing industry. The 2 percent tax is equivalent to 2.5 – 2.8 USD per tonne.

Though it is good to curb woodchip shipments to ensure material supplies for domestic processing, the effectiveness of the tax solution should be thoroughly assessed, he said.

Other experts said difficulties facing this industry include not only supply and demand changes but also the uncontrolled and rapid development of the sector.

Nguyen Nhu Xuan, Deputy Director General of the Vietnam – Japan Chip Corporation Ltd (Vijachip), suggested authorised agencies delay or lift the export tariff, giving producers enough time to prepare for in-depth processing.

However, Deputy Minister of Agriculture and Rural Development Ha Cong Tuan said the State’s consistent viewpoint is to cut down the proportion of woodchip in the export structure. An export tariff on woodchips had been discussed for five years, so the 2 percent rate imposed is not a surprise.

The supply and demand relation is the root of the problem. If industry insiders fail to forecast changes, the problem will never be solved, he added.

At the workshop, participants said the decline in demand for woodchip seems likely to prolong until late 2016, which will limit woodchip exports this year at around 7 million tonnes in volume and 600 million USD in revenue, equivalent to about 60 percent and 50 percent of last year’s respective figures.-VNA