Vietnam is increasing its imports of primary wood products, especially hardwoods, from over 100 countries to meet the demands of the rapidly expanding processing sector in the country.
In 2018, Vietnam’s wood processing industry imported the roundwood equivalent nearly 10 million cu.m of timber that provided around 25% of the total input required by the domestic industries. The value of this wood raw material was US$2.34 billion in 2018 up by 7% compared to 2017.
The EU-Vietnam VPA/FLEGT is to be implemented soon according to analysts who say this is expected to generate many export opportunities for domestic manufacturers. However, implementation will challenge the sourcing of wood raw materials as Vietnam still depends on imports from so-called ‘high-risk’ countries in terms of verification of legality.
Most of Vietnam-made finished wood products are exported to developed markets such as the USA, EU, Japan and South Korea so must meet the legal and technical requirements in these countries. This can be achieved by utilsing domestic planation material such as acacia, eucalyptus and rubberwood and importing verified legal timber raw materials.
Among the top 15 raw wood supplying countries there are 7 high risk sources in terms of legality and these currently account for a high proportion of Vietnam’s timber imports.
The implementation of the VPA will also impact imports of high value precious species used mainly for domestic consumption and imported from countries with weak forest management and law enforcement.
High import prices threatens competitiveness of Vietnamese companies
Over the past few years there has been a rise in raw material imports from the US, the EU and some African countries but the Vietnamese industries complain the CIF prices are very high and there are high logistics costs and that this is threatening the competitiveness and productivity of the Vietnamese companies in international markets.
The industry is now relying more heavily on domestic plantation resources for both exports and for domestic sales.