Vietnam’s timber industry is expected to see a 15.5% year-on-year drop in exports, totaling US$13.5 billion, according to the Vietnam Timber and Forest Product Association (Viforest).

During a conference held on December 21 in Hanoi, various stakeholders, including VIFOREST, convened to discuss the sustainable development and pressing issues facing the timber industry.

Do Xuan Lap, chairman of Viforest, said the plunge in demand had resulted in a sharp fall in orders, compelling many businesses in the country to scale down production and, in some cases, cease operations.

The industry is grappling with other challenges as major foreign markets have tightened regulations regarding the legality and sustainability of timber products.

The EU Deforestation Regulation (EUDR), adopted in June, mandates that products entering its market must meet legal compliance and forest preservation standards.

Both domestic and export markets are increasingly prioritizing low carbon emissions across the supply chain to achieve net-zero goals, making high-carbon products less competitive.

Vietnam’s timber sector also faces challenges related to imported timber. Annually, the country imports 1.5 to 2 million cubic meters of round and sawn timber from tropical countries, accounting for 30-40% of the total imported raw timber. This not only negatively impacts the industry’s reputation but also eliminates opportunities to utilize low-risk imported timber and locally grown timber from millions of farmers.

To Xuan Phuc, managing director of the Forest Policy, Trade, and Finance Initiative at Forest Trends, said that 77% of total timber exports to the EU fall under wood products (HS 9401 and HS 9403), while the remaining 23% belong to the wood and raw material group (HS 44).

From January to November, timber and wood product exports to the EU declined by 32%, primarily due to the stringent provisions of the EUDR.

European buyers within the EU are increasingly embracing voluntary sustainable production and consumption standards for wood products, such as those with Forest Stewardship Council certification.

The Vietnam-EU Voluntary Partnership Agreement on Forest Law Enforcement, Governance, and Trade (VPA/FLEGT) commits Vietnam to ensuring the legality of all wood products exported to the EU.

Vietnam is actively working on domestic legislation and building a system to guarantee the legality of its timber, encompassing both domestic and export supply chains. According to Phuc, FLEGT-certified wood broadly meets the EUDR’s legal requirements.

Despite signs of market recovery, Lap anticipates challenges in 2024, with the sector’s growth expected to decelerate to 10-12%.

Saigon Times