VietNamNet Bridge – Wooden furniture manufacturers, in an effort to take initiative in their business plans, have been trying to develop material growing areas. However, it is unclear when the idea can turn realistic.

The rapid development of the wooden furniture industry and handicrafts has led to the sharp increase in the demand for timber materials. At present, more than 80 percent of materials for processing factories are the imports.

Every year, Vietnam has to import 1.5-2 million cubic meters of timber. In 2011, Vietnam exported 1.3 billion dollars worth of wood, while it gained 4 billion dollars from wooden furniture exports.

The story of Truong Thanh

The timber material shortage was foreseen many years ago, when Vietnam began boosting wooden furniture exports. Therefore, five years ago, the Truong Thanh Furniture Corporation (TTFC), when deciding to set up more wood processing factories in many localities in the country, it also planned to grow forests as well.

TTFC, which strived to make wooden furniture products with 100 percent of timber from its forests in the future instead of having import timber from Africa, has caught the attention of a Japanese investor.

As a result, in late 2011, the Truong Thanh Oji (TTO), a joint venture between TTFC and Oji Group, a Japanese afforestation and paper producer, was established with the chartered capital of 7 million dollars. The initial goal of the joint venture is to grow 17,890 hectares of forests in Phu Yen province.

In Vietnam, TTFC has been well known as the leading wooden furniture manufacturer and exporter. According to Vo Truong Thanh, President of TTFC, the corporation has been pushing up the afforestation projects in Dak Lak (5000 hectares have been grown out of the planned 50,000 hectares), Dak Nong (500 hectares) and 40,000 hectares in Phu Yen.

It’ll be a great challenge to develop forests

Thanh has admitted that TTFC, like other Vietnamese enterprises, still does not have experiences in afforestation, suitable technologies and sufficient finance capability.

Experts also say that Vietnam’s experiences in the field are just enough to help re-green uncultivated land and bare hills, while not enough to carry out the high-yield afforestation for commercial purpose.

Therefore, teaming up with a Japanese investor was the way TTFC chose to follow to take full advantage of the financial capability, technology and experience of the Japanese partner.

Experts have also said that there has been no thorough research work about the afforestation methods, seeds, yield, insects and fire prevention measures. Therefore, they still have doubts about the feasibility of the afforestation projects, even though the Ministry of Agriculture and Rural Area (MARD) has vowed to develop afforestation projects with FSC certificate (forest stewardship council).

Under the forestry development strategy by 2020 approved by the government, Vietnam needs to have 2 million hectares of new forests to satisfy the demand for timber materials and obtain the forest coverage level of 47 percent across the country.

In order to implement the program, Vietnam would need tens of trillions of dong, of which 60 percent is expected to be mobilized from the public and investors.

However, potential investors, both domestic and foreign, now find it hard to approach the land fund reserved for growing forests for commercial purpose.

A MARD’s report showed that in the whole year 2011, only 200,000 hectares of forests, not including preventive, special-use forests grown with the state sourced money were developed.

Meanwhile, the forest plantation has been slowing down. In the first eight months of the year, less than 100,000 hectares were developed.

Compiled by Kim Chi