The timber processing sector’s failure to implement proper measures for sustainable development means all management agencies and businesses must devote more effort to effective reforms.
Vietnam now has more than 3,900 wood processing businesses, most of them are small sized in terms of labour force and investment capital. More than half of these enterprises are simply-equipped and produce low-quality products for the domestic market.
The sector’s capacity is nearly 15 million cubic metres of circle wood per year. Before 2003, Vietnam mainly exported plank and outdoor wood products but now handicraft products and furniture are also exported.
Product diversification and trade activity promotion have fuelled significant growth in exports to major markets. Compared to 2011, exports to the US have increased by 31.3 percent, to China by 24.3 percent, and to Japan by 21.3 percent.
According to the Ministry of Agriculture and Rural Development’s (MARD) statistics, timber and handicraft product exports hit US$2.7 billion in the first seven months of this year, representing a year-on-year increase of 21.6 percent.
Vietnamese timber products can now be found in 120 countries and territories across the world, says MARD.
In addition to penetrating new markets in Western Asia and Eastern Europe, businesses are focusing on the domestic market with the aim of exploiting opportunities in direct retail as well as distribution networks.
However, made-in-Vietnam products still face tough competition from imports. Domestic businesses are at serious disadvantaged due to their lack of reputable trademarks, a good sense of the market’s tastes, and unreasonable prices.
The sector’s growth is primarily dependent on exports and processing for foreign partners. Only some businesses have actively invested in the technology required to produce their own designs and thereby increase the value of their brands in the market. Most businesses find it difficult to meet big orders because of their limited capitalization.
Nguyen Manh Dung from the Department of Agriculture, Forestry and Fisheries Products Processing and Salt Industry proposed that timber processing enterprises should focus on improving the quality of their products.
He says reforming management mechanisms and prioritising competitiveness is also needed to assist the production of furniture, outdoor timber products, and handicrafts. Dung advises upgrading small and medium-sized factories, developing larger-scale timber processing facilities, and diversifying products even further.
Phan Thi Thanh Minh, chief representative of the Ministry of Industry and Trade, says Vietnam must accelerate forest planting to ensure the stable supply of wood material and reduce dependence on imports.
She urges the MARD to devise measures for reforestation, allow businesses to scale up their reforestation projects, and provide loans to make those projects more effective.
Minh also recommends that research should be better utilised to target and tailor suitable products for specific markets. She urges businesses to consider expansion into newly- emerging markets.
In spite of the current difficulties, those businesses who make knowledgeable investments have the opportunity to build customer trust and advance their standings in the market.
Quality improvement, design diversity, and trademarking are all essential for greater success, she stresses, adding that material production businesses and processors should closely coordinate with each other.
In the future, the Ministry of Industry and Trade aims to develop the forestry product processing into one of the economy’s key industries.
The ministry has asked trade counselors overseas to support businesses with market information and favourable import-export policies, Minh says.
(VOV)
