Vietnam’s wood and wooden product exports to the United States may be subject to higher import duties due to a surge in export revenues and China’s foreign direct investment in the local industry, experts said at a recent seminar in Hanoi.
|Workers are seen at a local wood processing factory. Vietnam’s wood and wooden product exports to the United States may be subject to higher import duties - PHOTO: LE HOANG|
Foreign direct investment inflows from China to the local wood sector have surged recently due to trade tensions between the United States and China.
According to the Foreign Investment Agency under the Ministry of Planning and Investment, in the first five months of the year, foreign investors poured capital into 49 new projects in the wood sector, equivalent to 73% of the total number of projects last year.
It is noteworthy that the number of projects with Chinese involvement accounted for 43% of the total.
At a seminar on the impact of the Sino-U.S. trade war on Vietnam’s wood sector, To Xuan Phuc, a policy analyst from the non-profit organization Forest Trends, said the United States has imposed higher duties on wood and wooden products originating in China, causing the shift of production and business activities from China to Southeast Asian nations, including Vietnam.
In reality, Chinese firms have recently created small-scale projects in Vietnam, with investment of some US$2 million each. In addition, they have hired Vietnamese firms to process their products, Phuc added.
Thus, Chinese firms have invested in third countries, including Vietnam, to avoid the United States’ new tariffs imposed on their goods, which may put the local wood sector at risk in the long term.
U.S. agencies have recently launched inspections into five U.S. companies importing plywood from Vietnam.
According to the Vietnam Timber and Forest Products Association, Vietnam’s wood and wooden product exports to the U.S. have surged, especially during the second half of last year, when the Sino-U.S. trade frictions heated up.
Vietnam exported US$3.6 billion worth of woodwork to the United States last year, soaring nearly 30% year-on-year. The woodwork export volume stateside in the first four months of this year was US$1.4 billion, an increase of 1.4 times.
If the trend continues, Vietnam will become the seventh largest supplier of wood and wooden products to the United States, instead of the 12th position, as currently held, Phuc predicted.
Products with high growth in export revenues to the U.S. include plywood, wooden chairs and kitchen furniture.
The sector has an annual trade surplus of some US$2.7-2.8 billion with the U.S. market, according to the General Department of Vietnam Customs. SGT
Woodwork exports increased sharply in Q1, partially thanks to higher demand from the US. However, experts say this may not be good news for the industry.
Although Vietnam’s wood and wooden product exports to the US in Q1 increased by over 34% year-on-year, insiders have expressed concern over tighter control measures potentially being applied to Vietnamese imports.