In 2022, despite facing numerous obstacles, the export of wood and forest products successfully attained its target of US$16.9 billion. Building on this momentum, the industry has set an export turnover goal of US$17.5 billion for 2023.
To achieve this objective, the General Department of Forestry has announced that, in addition to implementing specific solutions, it will focus on coordinating efforts to prevent trade fraud and regulate imported timber. This is due to the wood industry's susceptibility to trade remedy investigations.
Growth in difficulty
Tran Thanh Binh, Head of the Import-Export Department of Agriculture, Forestry and Fisheries, Import-Export Department (Ministry of Industry and Trade), acknowledged that the trade environment and the wood industry have faced significant challenges in recent times. The ongoing COVID-19 pandemic, political instability, and inflation trends in major markets such as the US and EU have made it difficult for businesses to secure and fulfill orders. Additionally, the industry has faced challenges such as high input costs and rising prices, which have negatively impacted the competitiveness of goods, including timber. Fluctuations in the financial and monetary markets have also resulted in a loss of competitiveness for the wood industry, with rapidly rising interest rates leading to high capital costs and supply chain disruptions.
Despite these challenges, Ngo Sy Hoai, the General Secretary of the Vietnam Timber and Forest Products Association, noted that the industry was able to achieve a positive outcome in 2022. While the market saw a significant decline in the third quarter, orders continued to drop to US$3.6 billion in the fourth quarter, a decrease of 3.4% compared to the same period in 2021. However, forest product exports for the year were estimated at US$16.9 billion, an increase of 6% compared to 2021 and surpassing the export target of US$16.3 billion. The majority of exports were directed towards China, Japan, and South Korea, with the US, Japan, China, EU, and South Korea accounting for nearly 91% of the export value of forest products.
In contrast, the import value of wood and wood products in 2022 was estimated at US$2.8 billion, a 4% increase compared to 2021. This resulted in a trade surplus of approximately US$14.1 billion, an increase of 6.5% compared to the previous year.
For 2023, the industry has set an ambitious target of achieving an export turnover of US$17.5 billion. Additionally, the industry aims to achieve a growth rate of 5 to 5.5% for forestry production value, maintain a forest cover rate of 42%, plant 245,000 ha of concentrated afforestation, 140 million scattered trees, and achieve an output of 22 million m3 of harvested forest timber, with revenue from forest environmental services estimated at around VND3,000 billion.
Proactively deal with trade remedy lawsuits
Vietnam's deep integration into the global trade process through various trade agreements has led to increased competition, with other countries implementing safeguards and self-defense measures. This has led to some allegations of Vietnamese wood products using Russian materials but being imported from China, and the EU passing a law that addresses both legally and illegally harvested forest products. As a result, businesses in the wood industry must be vigilant and aware of these issues.
Ngo Sy Hoai, General Secretary of the Vietnam Timber and Forest Products Association, noted that the industry has faced anti-dumping lawsuits. With over 6,000 enterprises in Vietnam, most of which are small and medium-sized, and around 3,000 participating in the global supply chain, trade remedies can have significant negative impacts on businesses, putting some at risk of default or bankruptcy. He emphasized that businesses must become accustomed to these challenges.
What should businesses do to deal with trade remedies cases?
To address these trade remedy cases, Hoai stressed the importance of preparation in two stages. Firstly, before signing commercial contracts or exporting wooden furniture, businesses must be equipped with the necessary tools and apply modern accounting software to ensure transparency. This will facilitate the provision of proof, invoices, and documents in case of any issues. Secondly, when dealing with major market lawsuits that initiate investigations, businesses must strengthen their capacity management. This includes investing in knowledge, technology, and people, as well as hiring foreign lawyers with adequate understanding of international law and the practice.
Furthermore, the role of local timber associations, the Vietnam Timber Association, and the authorities must be enhanced to provide timely warnings to businesses, and training courses must be provided to improve businesses' trade defense skills, record keeping, and criticism.
To achieve the export turnover target set for 2023, the General Department of Forestry will implement a project to develop a sustainable and effective wood processing industry between 2021 and 2030. In addition, it will focus on coordination to prevent commercial fraud by some export enterprises and control the import of timber from countries with high risks of illegal timber origin.
Read more: Agricultural Products Industry Report