Vietnam’s forests are instrumental to the country’s “green economy”, with the government setting a target of US $17.5 billion and 23 million cubic metres of wood from locally grown forests in 2024.
At the same time, it is heavily investing in “carbon abatement”, with more than 10.3 million tonnes of carbon emissions “abated” through the World Bank’s Forest Carbon Partnership Facility.
That is according to Triệu Văn Lực, Deputy Director of Vietnam’s Forestry Department, who revealed the country’s roadmap for 2024 – which includes addressing a 15.8% downturn in “increasingly competitive” hardwood exports.
The decline was “caused by market instability, the Russia-Ukraine conflict and tightening spending in the US and EU markets on non-essential products, including wood.”
Nonetheless, Vietnam has unlimited potential, with ASEAN earlier this year predicting that it will replace the Philippines as the region’s top-performing economy in 2024.
The country’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.
As reported in August, Vietnam is the world’s second-largest export market for the manufacture of hardwood furniture, with more than 40% of furniture ending up in the US market.
However, the country relies heavily on imported hardwoods to meet the demand for manufactured hardwood furniture – with at least one-third of tropical hardwoods imported for Vietnam-manufactured products are from “high-risk” locations.
In light of the push by the EU to implement its Deforestation Regulation, Vietnam is looking to boost manufacturing on locally grown plantations – which have exploded since the mid-1990s – as well as improve due diligence on the 5 to 6 million cubic metres of imported raw sawlog that is processed and manufactured into furniture.
To boost exports, Mr Văn Lực told Vietnamese news sources connected to Wood Central that the government will “invest in legal sources of wood grown locally in Vietnam.”
He said this “will encourage conditions for EU suppliers to promote raw materials in Việtnam while controlling imports from high-risk areas.”
In April, Wood Central reported that Vietnamese Prime Minister Pham Minh Chinh pushed through reforms to the country’s trade rules and prevent actions “that could damage the reputation of Vietnam’s forestry industry” to encourage greater foreign investment.
It includes investment in “hi-tech forestry parks” that use state-of-the-art technology to improve the forest’s productivity, production, and efficiency.
Vietnam should be an attractive market for foreign direct investment, with the country amongst the most prominent 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 perception that the timber industry is not profitable and is impacted by “red tape.”
Accordingly, local producers do not have the infrastructure to meet domestic demand for timber – pushing the country to rely increasingly more on raw imports to meet local demand.
With more than a quarter of the forests managed by smallholders, landowners lack the money to invest in value-added processors and harvest the resource before it reaches a stage suitable for high-quality wood products.
Given this context, the government’s commitment represents a vital policy shift – focusing on building the capacity of micro, small and medium-sized enterprises (MSMEs) and domestic plantations.
