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Vietnam’s Ambition: Trading Hub Key to $25B Timber Export Plan

One of ASEAN's top performing economies wants a much larger slice of the global timber and bamboo trade.


Wed 28 Aug 24

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Vietnam has big plans for global timber – with the government investing billions to make its export market more competitive, establish an international trading hub connecting Vietnam traders to the Pacific and Europe, and is committed to grow forest exports from US $17.1 billion in 2022 to US $25 billion by 2030.

That is according to the latest version of the National Forestry Plan, which was approved by Phạm Minh Chính, Vietnam’s Prime Minister last week.

It comes as the emerging economy is now looking to double its productive forests to 1 million hectares as part of a suite of reforms that will see the government use tax concessions, review the land reserves and small-sized timber forests, and promote sustainable forest management and certification to drive a forest economy.

Earlier this year, Wood Central reported that Vietnam, one of ASEAN’s top-performing economies, is looking to use forest-based assets to supercharge its green economy. Already, the plan has seen Vietnam boost its forest cover to 43%, growing its “certified forest area” to more than 465,000 hectares, just under halfway to its 1 million hectares target of PEFC or FSC-certified forests by 2030.

Vietnam's timber and forest products, now exported to 140 countries, have seen Vietnam emerge as a regional power, strengthening trade partnerships with the US, China and Australia due to its abundant bamboo, rubber, and grass resources. (Supplied by FSC International)
Vietnam’s timber and forest products, now exported to 140 countries, have seen Vietnam emerge as a regional power, strengthening trade partnerships with the US, China and Australia due to its abundant bamboo, rubber, and grass resources.

The push to grow the country’s productive forests comes amid mounting pressure for the government to reduce heavy reliance on imported “at-risk” hardwood species. More than 6 million cubic metres of timber are imported from over 100 countries annually, manufactured into furniture, and sold into global markets.

“Domestic consumption of wood and timber products is expected to reach $5 billion by 2025 and $6 billion by 2030,” according to Vietnamese media group The Star, adding that “by 2025, the income value from (Vietnamese) timber plantations per unit area should increase 1.5 times, and by 2030, it should double, compared to 2020 levels.”

As one of the world’s largest manufacturers of furniture and rubber, Vietnam is under mounting pressure to speed up targets for PEFC and FSC in the wake of the EU Deforestation Regulation and the US Lacey Act – with PEFC running crucial programmes in the region to boost its readiness for forest certification. 

By the numbers, more than 30% of furniture sold in the US market comes from a Vietnamese supply chain, and the US government is pushing Vietnam to do more to tackle illegal timber entering its supply chains (and reduce Chinese plywood using Vietnam to circumvent trade sanctions).

In recent years, experts have urged the government to focus on building the capacity of micro, small, and medium-sized enterprises (MSMEs) and domestic plantations operated mainly by smallholders. Last year, Wood Central reported that Vietnam produces more than 20 million cubic metres of plantation timber yearly—often sold into the woodchip market rather than used in the country’s furniture supply chains.

Is Vietnam’s forest economy a good bet for foreign direct investment?

In theory, Vietnam should be an attractive market for overseas capital. According to UN data, Vietnam is among the largest global exporters of wood pellets, veneer sheets, and recovered paper. However, according to an ASEAN Briefing provided by professional services company Dezen Shira and Associates, there is a general perception that the timber industry is not overly profitable and could be negatively impacted by regulatory changes.

In the 2020 report, Dezan Shira & Associates reports that Vietnam’s producers struggle to have adequate infrastructure to meet domestic demand for timber.

Footage courtesy of @WorldAgroforestry

With more than a quarter of the forests managed by smallholders, many landowners lack the money to invest in value-added processors and harvest the resource before it reaches a stage where it can be used in furniture production or other high-quality wood products.

Consequently, Vietnam’s reliance on tropical hardwoods has left it vulnerable to volatility in the global timber supply, with concerns that huge volumes of furniture that arrive in European markets might not meet the requirements of the EUDR.

Author

  • Jason Ross

    Jason Ross, publisher, is a 15-year professional in building and construction, connecting with more than 400 specifiers. A Gottstein Fellowship recipient, he is passionate about growing the market for wood-based information. Jason is Wood Central's in-house emcee and is available for corporate host and MC services.

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