Vietnam wood industry targets US$15 billion export revenue
This year Vietnam targets earning $14.5 billion of export revenue from wood and forest products.
More than 300 large customers from many countries participated in the trade promotion event of Vietnam's wood industry. Many commitments and contracts were made to help Vietnamese enterprises become more confident on their quick recovery to reach a record export revenue of $15 billion.
Nguyen Van Dien, Director of the Forestry Production Development Administration of the General Department of Forestry, said that under the impact of the 4th wave of Covid-19 epidemic, the productivity of Vietnam's wood industry in August decreased by 30% year on year.
Mary Tarnowka, Executive Director of the American Chamber of Commerce in Vietnam (AmCham), said that US retailers were negatively affected when Vietnam implemented prolonged social distancing. However, the AmCham representative believed that the purchasing power of the US market for Vietnamese wood products will continue to grow in 2022-2023.
According to AmCham, it is very difficult for some manufacturers in Vietnam to reach 100% capacity within the next six months while they will have to pay high shipping costs. Some US manufacturers and investors have moved part of their orders to China.
President of the European Chamber of Commerce in Vietnam (EuroCham) Alain Cany worried that the sea freight rates are still very high. Recently, many businesses wanted to ship goods but could not find an empty container. European enterprises in Vietnam have probably lost hundreds of millions of dollars because of the loss of orders.
According to businesses, the time of social distancing was also the time to receive a lot of orders, especially when demand from European countries such as Germany, France, the Netherlands... boomed. However, in the past few months, everything stopped in Vietnam due to social distancing. Problems such as lack of raw materials, high prices, workers returning home, or factories that are not yet operating at 100% capacity are the concerns of many businesses.
Bui Ta Hoang Vu, Director of Ho Chi Minh City Department of Industry and Trade admitted that 2021 is a difficult year for sea transport. Freight rates have increased greatly, while there were periods when the number of containers stuck at Cat Lai port was huge. However, this situation has improved and seaport activities in Ho Chi Minh City are bustling again. According to proposal of associations, HCM City has delayed the collection of fees of enterprises using port infrastructure until 2022 instead of from October 1, 2021.
Deputy Director General of the General Department of Forestry (Ministry of Agriculture and Rural Development) Bui Chinh Nghia said that this year Vietnam targets earning $14.5 billion of export revenue from wood and forest products. By the end of September, Vietnamese woodwork exporters earned $11.9 billion. If the monthly export turnover from now until the end of the year reaches $800 million to $1 billion, Vietnam will fulfil the goal.
"However, we expect that the export value of 2021 will reach about $15 billion, exceeding the set target," Nghia said.
According to the Forestry Production Development Administration of the General Department of Forestry’s representative, the restoration of the supply chain of the wood and woodwork industry will be divided into 3 phases: the adaptation phase for about 3 months; recovery period from 3-6 months and the acceleration phase after 6 months.
In the adaptation phase, the goal is to restore about 70% of factories, with estimated revenue of $900 million-$1.2 billion/month. In the recovery phase, businesses prepare for the new production season with new orders, with 90% of plants resuming operation and expected revenue of $1.2-$1.4 billion/month.
In the acceleration phase, the wood industry will develop and grow by 15% compared to 2021. In this period, it is necessary to restructure labor, and businesses must build resilience plans for the new situation, with sustainable supply chains, and push forward strong production and business.
The ongoing coronavirus outbreaks are now threatening to bring the timber industry to its knees, with businesses and associations hoping for preferential vaccine treatment and financial support for test kits and other pandemic-related expenses.
In recent decades, the Vietnamese wood industry, from a small craft industry, has grown rapidly to become a global processing industry.