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Dr. To Xuan Phuc, forestry expert of Forest Trends and member of the research team of the Timber and Forest Product Association (VIFOREST), believes one of the key reasons why the export of timber and wood products to the US has prospered over the past year is due to strong growth in the US housing market, causing an increase in demand for home furniture.
This, therefore, represents a great opportunity for wooden furniture suppliers, including those from the nation, he adds.
|Illustrative photo: VOV|
A report compiled by the VIFOREST indicates that the export value of timber and wood products last year hit $12.01 billion, marking an increase of 16.3% over the previous year, with the US, China, the Republic of Korea, Japan, and the EU making up five major Vietnamese export markets. Indeed, the country’s export turnover from these markets reached $10.78 billion, accounting for 89.7% of its export value over the past year, VOV reported.
Most notably, 2020 saw Vietnamese exports to the US market represent 58.1% of the country's export value in terms of timber and wood products to all markets.
Despite local wood exports recording many positive signs over the past year, VIFOREST experts also warn about risks relating to origin evasion for this export item, especially in terms of kitchen cabinets and upholstered seats.
The export of kitchen cabinets and their spare parts last year from the country to the US market accounted for 76% of the total export value of this product, thereby representing a 134% rise to over $514.53 million compared to 2019. However, VIFORES notes that these two items contain a variety of risky factors when exporting to the US market.
|Wood products are processed for export. Photo: VNA|
According to VIFOREST, the local wood industry has yet to overcome the obstacles from major markets, including the US and the EU, in terms of measures or actions that are likely to be imposed on timber and wood products from the nation, such as anti-tax evasion, antidumping, and countervailing duty.
VIFOREST recommends relevant Vietnamese agencies co-ordinate efforts with the business community in order to identify risky items and fraudulent companies. This can be done whilst building a communication channel between various timber associations and management agencies in order to regularly update information regarding fraudulence-related signs, thereby making timely interventions.
Wood sector sets sights on the export target of $14 billion in 2021
Despite facing several trade remedy cases and tax evasion lawsuits over the coming year, the forestry sector has set a target of achieving an export target of $14 billion, according to industry insiders.
Pham Van Dien, deputy director of the Vietnam Administration of Forestry, said despite a tough year caused by the impact of the novel coronavirus (COVID-19) pandemic, timber and forestry exports enjoyed an increase of 16.4% to approximately $13.17 billion last year in comparison to 2019’s figure. In addition, the import value of timber and wood products also witnessed a surge of 11% to $2.58 billion, with the sector’s trade surplus rising by 17.9% to $10.5 billion.
Minister of Agriculture and Rural Development Nguyen Xuan Cuong noted that the forestry sector has encountered numerous difficulties in recent times, including fierce competition in the global market due to Vietnamese plywood exports facing trade defense cases and tax evasion in two of its largest markets, namely the Republic of Korea (RoK) and the US.
Minister Cuong has therefore requested that the Vietnam Administration of Forestry continue to ramp up afforestation for the purpose of sustainable forestry development and export growth moving forward.
Concurring with this viewpoint, Deputy Minister of Agriculture and Rural Development Ha Cong Tuan explained that the wood industry should redouble efforts in a bid to remove hurdles that hamper develop production, whilst also intensifying forest protection activities for sustainable development.
|Vietnam targets forestry exports of $14 billion in 2021. Photo: HanoiTime|
With regard to solutions that can deal with tax evasion investigations, Dien stated that the forestry sector has implemented a wide range of drastic solutions to combat the illegal trade of timber and wooden products, with the country even signing a Voluntary Partnership Agreement (VPA) with the EU.
The trade deal, which became effective from June 1, 2019, has helped local firms to sharpen the competitiveness of wooden products exported to the EU, improve forest governance and promote legal trade timber products to this highly lucrative market. Meanwhile, the Vietnamese Government has also issued a decree relating to the local timber legality assurance system.
During a recent meeting of the Joint Committee under the Vietnam-EU Comprehensive Partnership and Cooperation Framework Agreement (PCA), the EU acknowledged that Vietnam has deployed the VPA/ Forest Law Enforcement, Governance, and Trade (FLEGT) Agreement in an effective manner, adding that there are concerns regarding trade fraud cases by foreign enterprises.
Dien stressed that Vietnamese involvement in several free trade agreements such as the EU-Vietnam Free Trade Agreement (EVFTA) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) is likely to lead to more cases relating to counterfeiting the origin of Vietnamese goods for export. This is typically done in order to enjoy a tax rate of 0%, with local export businesses set to partner with other relevant units as part of greater efforts to combat these illegal activities.
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