Wood material sources from Cambodia have become exhausted: VN Ministry of Industry and Trade

Woodwork industry thirsty for materials

09/10/2008

VietNamNet Bridge – The thirst for wood materials has become more serious than ever before as Vietnam has been relying on material imports while supply sources have become tighter.

The demand for wood material imports has been increasing sharply while sources of supply have been diminishing

According to the Ministry of Industry and Trade, the demand for wood material imports has been increasing sharply while sources of supply have been diminishing. Sources in Laos and Cambodia have become exhausted, while material prices in Malaysia, the main supplier for Vietnam, are increasing day by day.

Increased fuel prices have made it more expensive to ship wood materials from more distant markets. Meanwhile, a lot of export countries, like Russia, have increased export taxes on wood materials.

Experts say that prices of imported wood have increased by 40-100%.

In a recent workshop on woodwork exports, Nguyen Ton Quyen, Chairman of the Wood and Forestry Products Association, said that Vietnam needs to import 3mil cu m of wood materials a year, worth $1bil, from ASEAN countries, Africa, South America and North America. Vietnam’s woodwork industry has been relying on imports for 80% of its supply.

In general, enterprises begin conducting negotiations with foreign partners in the third and fourth quarters for imports of wood materials the following year. However, Tran Quoc Manh, Deputy Chairman of the HCM City Fine Arts and Woodwork Association, said that enterprises now do not have capital to import materials. The tightened monetary policies have kept woodwork enterprises from bank loans.

“As enterprises do not have money to import materials, the woodwork industry will have no material in 2009, which will certainly push enterprises against the wall,” Quyen said.

Dao Van Trang, General Director of Khai Vy, a big woodwork producer and exporter, once suggested buying forest in South America to provide materials for Vietnamese woodwork producers. However, he was not able to follow up on this idea because there was no regulation that allowed it.

“If we had been allowed to buy forest at that time, the value of the forest would have increased by ten-fold,” Trang said.

The serious shortage of wood materials has prompted Vietnamese producers to flock to Laos to engage in afforestation. Meanwhile, Trang believes that it would be better to develop local forests than afforest neighbouring countries. He said that the state should assign individuals or private run enterprises to develop forests.

Vo Truong Thanh, Chairman and General Director of Truong Thanh Woodwork Joint Stock Company, said that Truong Thanh plans to develop 100,000 ha of forest in 10 years, which would allow the company to control its material sources.

Thanh said that as of 2016, Truong Thanh will be able to supply 500,000-1mil cu m of wood per year, or 20-30% of the demand of the whole country at that time.

Truong Thanh has purchased 2,000 ha of 4-6 year-old forest in the Central Highlands and central region. It expects to be able to supply 50,000 cu m of wood/year in two years’ time, which will be provided for six of the company’s processing workshops.

Vietnam now a hub of illegal timber trade

Vietnam has become a hub for processing huge quantities of unlawfully-logged timber from across Indochina, threatening some of the last intact forests in the region, a detailed investigation has revealed.

Undercover investigations by the UK-based Environmental Investigation Agency (EIA) and Indonesian NGO Telapak have discovered how Vietnam’s booming economy and demand for cheap furniture in the West is driving rapid deforestation throughout the Mekong river region.

Much of the illegally-imported wood is made into furniture for export to garden centres and merchants in the UK.

Field investigations in Vietnam and neighbouring Laos, including secret filming and undercover visits to furniture factories, have demonstrated that although some countries like Indonesia have cracked down on the illegal timber trade, criminal networks have now shifted their attention to looting the vanishing forests of Laos.

This illicit trade is in direct contravention of laws in Laos banning the export of logs and sawn timber and EIA/Telapak are calling for urgent international action.

Truck convoys

Investigators visited numerous Vietnamese furniture factories and found the majority to be using logs from Laos. In the Vietnamese port of Vinh, they witnessed piles of huge logs from Laos awaiting sale.

At one border crossing on one occasion alone, 45 trucks laden with logs were filmed lining up to cross the Laos border into Vietnam.

The report estimates at least 500,000 cubic metres of logs are moved in this way every year.

Since the 1990s, Vietnam has taken steps to protect to conserve its remaining forests while at the same time, massively expanding its wooden furniture production.

Stolen timber

Vietnam has an unenviable track record in using stolen timber. Past investigations have revealed it laundering illegal timber from both Cambodia and Indonesia..

The plundering of Laos’ forests involves high-level corruption and bribery and it is not just Vietnam which is exploiting its neighbour; Thai and Singapore traders are also cashing in.

Posing as investors, EIA/Telapak investigators met one Thai businessman who bragged of paying bribes to senior Laos military officials to secure timber worth potentially half a billion dollars.

“The cost of such unfettered greed is borne by poor rural communities in Laos who are dependent on the forests for their traditional livelihoods,” said EIA's head of Forests Campaign, Julian Newman.

He said the local people gain virtually nothing from this trade, with corrupt Laos officials and businesses in Vietnam and Thailand, the profiteers.

Growing market

The report concludes that to some extent the dynamic growth of Vietnam’s furniture industry is driven by the demand of end markets like Europe and the US.

“The ultimate responsibility for this dire state of affairs rests with the consumer markets with import wood products made from stolen timber,” said Julian.

“Until these states clean up their act and shut their markets to illegal wood products, the loss of precious tropical forests will continue unabated.”

EIA/Telapak are calling for: better enforcement by the timber-producing and processing countries and new laws banning the import of products and timber derived from illegal logging in the EU and US.

Source: IEA/Telepak report, 19 March 2008