VietNamNet Bridge – The forestry sector this year faces serious challenges because of newly issued regulations from key markets like the US and EU on wood products, officials said at a forum held last Friday (March 29) in HCM City.

Illustrative image. (Photo: Internet)

Vo Dai Hai, deputy head of the Ministry of Agriculture and Rural Development's Forestry Department, said the EU on March 3 issued a regulation that requires exporters to give proof of legal origin of wood and wood products.

The Forest Law Enforcement, Governance and Trade (FLEGT) regulation will make it hard for exporters to find legal wood sources because the country remains heavily dependent on imported raw materials, according to Hai.

Hai was speaking at a forum held by the HCM City Wood Industry and Handicrafts Association, in collaboration with the German Academy for International Cooperation (GIZ) and the Forest Trend Organisation.

Viet Nam and the EU continue to negotiate the Voluntary Partnership Agreement (VPA/FLEGT) that would build a system to ensure legality and FLEGT-licensed timber for shipments of timber and timber products exported from Viet Nam to the EU.

In the interim, Vietnamese companies that export timber and timber products have to carry out due diligence under Regulation 995/2010, which requires timber from the EU to be in line with the Action Plan on FLEGT.

In addition, many other countries are applying strict measures against illegal wood products. The Forest Stewardship Council (FSC) Certificate is increasingly required for many products.

In Viet Nam, implementation has been slow to reach the target of 30 per cent of certified-forest areas by 2020 under the government's Forestry Development Strategy.

Last year, the total area of FSC-certified forests in Viet Nam covered only 45,170 hectares.

Problems in land-dispute settlements and high-certification fees as well as the pace of implementation have all failed to meet expectations.

Huynh Van Hanh, permanent deputy chairman of HCM City's Wood Industry and Handicrafts Association, said despite challenges from the Lacey Act and FLEGT, many Vietnamese businesses were not fully aware of these requirements.

"This is strongly affecting their production, trading and business," he said.

Hanh also said that export markets such as the US, Australia and Asia would see only slight growth rate this year. Ha Cong Tuan, deputy minister of Agriculture and Rural Development, said
Viet Nam was the sixth biggest wood and wood-product exporter in the world. It is the second-largest in Asia and the first in Southeast Asia.

In the first quarter of this year, Viet Nam's wood and wood-product exports recorded more than US$1.2 billion, the biggest turnover ever recorded, with a 15 per cent growth rate compared to the same period last year.

Last year, Vietnamese wood products were exported to 100 countries and territories, of which there were four key markets: the US (more than 38 per cent), China (15 per cent), Japan and Europe (28 per cent).

This year, wood and wood-product exports are expected to reach a growth rate of 10-15 per cent compared to last year.

Apart from policies that would greatly hinder exports from Viet Nam, the domestic timber industry is facing challenges to sustainable development.

Currently, the plantation wood supply in northern and north-central provinces accounts for 70 per cent of the country's total demand. However, investment in the wood processing industry in the region has been inadequate.

Support industries for the wood-processing sector have not developed well. Most auxiliary raw materials have to be imported, leading to unexpected price increases.

Most Vietnamese exporters have not built distribution networks in other countries, only through middleman. It leads to weak prices and market competitiveness.

Source: VNS