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Tag: timber

  • Timber exporters face sharp decline in orders

    Timber exporters face sharp decline in orders

    Vietnamese wood and wooden furniture enterprises have been facing many difficulties as export orders have dropped 50-60% since the beginning of this year, pushing firms to cut off at least half of their production capacities.

    Data from the General Department of Customs showed that the export turnover of wood and wooden products reached $3.9 billion in the first four months, down 30.6% year-on-year.

    At the same time, the import value of wood and wooden products also decreased significantly to $634 million, down 33.6% over the same period last year.

    During the four months, Vietnamese exports of these goods to major markets all decreased sharply such as the U.S. ($2.02 billion, 38%); Japan ($556 million, 1.5%); South Korea ($274 million, 22%) and China ($481 million, 13%).

    Analysts and businesses have said that the decrease in wood and wooden goods exports was foreseeable. They attributable the decline to inflation surges in some countries, which were also major importers of Vietnam’s wood and wooden goods, resulting in sluggish demand for these products.

    For example, the U.S. imported $1.24 billion worth of timber and wooden products from Vietnam in the first three months, a year-on-year drop of 42%.

    In the context of inflation and the banking crisis, U.S. banks have tightened credit, making importers unable to finance import goods in large quantities. The demand for U.S. wooden furniture imports has plummeted, analysts said.

    According to wood exporters, their export orders from the U.S. market have decreased between 50% and 55% depending on the type of wood products. Meanwhile, orders from the E.U. – another key export market, also dropped 60%.

    Chairman of the Binh Duong Woodworking Association Nguyen Liem said amid the current difficult context, the provincial wood enterprises had slashed their production capacities by 60%.

    “The current global economic situation is very unpredictable,” Liem said. “All market signals are not bright, and it is hard for wood enterprises to draw up their business plans.”

    Liem also predicted that when the market situation improved, and the inventory decreased, foreign customers would continue to order but not sooner than early 2024.

    Around the beginning of 2024, the market would be less difficult, and businesses would have export orders again. Still, only small ones, he said, forecasting that the market would likely recover at the end of 2024. However, the recovery growth would depend on the world’s economic and political situation.

    Despite a sharp slump in orders, trade experts said the U.S. remained a key export outlet for Vietnam’s wood industry. Therefore, businesses need to maintain the U.S. market by updating information and converting production according to the market’s consumption trends.

    In addition, management agencies should support businesses to bring Vietnamese wooden goods into large distribution systems such as Walmart, Costco and Amazon. This was an effective way for the firms to develop their brands, avoiding relying too much on intermediaries, trade experts said.

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  • RM25b export target for wood-based products achievable: Malaysian Council

    RM25b export target for wood-based products achievable: Malaysian Council

    The Malaysian Timber Council (MTC) remains optimistic that Malaysia will achieve its RM25 billion export target for wood-based products by 2020 despite a fragile global trade and economy caused by the US-China trade war. “We believe that the RM25 billion target is still achievable notwithstanding the potential headwinds that may come along the way, for instance Brexit, US-China trade war and other regional conflicts,” MTC CEO Richard said.

    “The good part about the timber and wood industry is that a lot of Malaysian businesses are very innovative, and they respond to changes quite quickly, in terms of adjusting to the changing needs and demands and also the challenges of the industry as well as economy,” he added.

    To recap, the Ministry of Plantation Industries and Commodities (MPIC) had in 2017 reduced the wood-based exports target from RM53 billion to RM25 billion due to shortage of raw materials.

    Yu said the RM25 billion target is more “realistic”, noting that the previous RM53 billion target was first formulated prior to the 2008 global financial crisis.

    “The planning and the formulation of the strategy was before that (the financial crisis). At that point of time, even in terms of the exchange rate was pretty favourable to us from ringgit terms perspective.

    “And looking at last year’s numbers, I think to get another incremental of about RM1 billion-RM2 billion for another three years should be quite realistic,” he added.

    The timber industry’s contributed RM23.2 billion to the government coffers in 2017, up 4.8% compared to last year’s figures.

    As at August 2018, the export figures had reached RM14.57 billion, in which the wooden furniture, plywood, sawn timber, fibreboard and builders’ joinery and carpentry are the main revenue generators for the sector.

    However, Yu noted that there is concern raised by the industry players on the potential Chinese products dumping.

    “That will obviously have an effect on our exports. But I believe the Ministry of International Trade and Industry is monitoring this issue closely,” he said.

    At present, Malaysia exports timber and timber-based products in over 160 countries.

    Moving forward, Yu said the country’s commitment in maintaining its forest cover at above 50% will ensure that the timber industry remains sustainable in the long-term.

    The MTC was established in January 1992 to facilitate the local industry players and promote the development and growth of the timber industry.

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  • Lack of timber threatens wood industry

    Lack of timber threatens wood industry

    This was stated by Bui Chinh Nghia, deputy head of the Ministry of Agriculture and Rural Development’s (MARD) Forestry Department. Nghia said this would result in a cut of some 40,000 cu.m. of raw material this year. Ensuring timber supply for domestic manufacturing is a problem in Vietnam as a large amount of raw timber is exported despite many domestic producers lacking raw material.

    To have enough material for processing and exports, many businesses have proposed that the government prohibit the export of raw material to other countries.

    If the quantity of exported wood is retained in the country, it would help local businesses take the initiative in signing orders with their partners in Europe and the United States.
    Sharing his opinion on this proposal, Huynh Kim Bau, assistant to the director of Saigon Furniture Co. Ltd, said the government should levy a tariff of 30-35 per cent on raw timber exports, the same level as applied by some regional countries, such as Cambodia and Thailand, to lower exports. In addition, enterprises need to plant high-quality tree species that grow in a short period of time to meet the industry’s increasing demand.

    Huynh Van Hanh, deputy chairman of the Handicraft and Wood Industry Association of HCM City, said small- and medium-sized enterprises (SMEs) needed to co-operate with each other if they wanted to compete with foreign firms globally.

    The association should make decisions based on three criteria — they are in real need of co-operation with other, they should trust their partners, and their rights and interests should be based on fairness as the work will be divided equally based on production and supply for each participant.

    As for those enterprises which are capable of expanding their business, they should invest in advanced technology to raise capacity and quality to overcome difficulties and access large orders.

    Hanh said Vietnam had more than 4,000 timber processing and export businesses but only seven per cent of them were large and could easily access huge orders from clients from the United States, Japan and the European Union. The remainder, which was small and medium enterprises, had weak competition capacity and small investment capital, hence they faced more difficulties while seeking orders.

    Meanwhile, the number of foreign investment businesses in the country was few, but they retained more than 50 per cent of the market share. Vietnamese SMEs mostly did outsourcing work of foreign investment businesses.

    Duong Phuong Thao, deputy director of the Import-Export Department under the Ministry of Industry and Trade, said Vietnam exported processed wood worth US$7 billion in 2016, while global demand stood at $400 billion for wood products. Vietnam’s wood industry, he said, must grow further to capitalise on the huge global demand.

    In 2017, MARD will switch the use of 200,000ha under small tree forests to growing large trees and issue sustainable forest certificate to those land areas. The total area under large trees granted sustainable forest certificates is expected to reach 500,000ha by 2020, promising a high-quality and certified source of timber for processing and exporting.

    Thao added that the Vietnamese Government planned to negotiate with its Lao and Cambodian counterparts to create better conditions for Vietnamese firms to source timber from forests in these countries to increase the supply of raw material.

    The local wood industry uses 30 million cu.m. of raw timber for manufacturing every year and has shipped products to more than 100 countries and territories. Only two-thirds of the timber is sourced domestically while the rest has to be imported.

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