Brexit to affect Vietnam wood sector

HA NOI, Vietnam (Viet Nam News/ANN) - Experts predicted that Brexit would affect Viet Nam wood sector as the country is one of the three biggest wood exporters to the UK besides Indonesia and Malaysia.

Viet Nam’s exports of timber and wood products to the UK would be affected by Britain’s exit from the European Union (EU), industry insiders said.

According to the Vietnam Wood and Forest Product Association (VIFORES), Viet Nam is one of the three biggest wood exporters to the UK besides Indonesia and Malaysia. The UK is also the largest EU importer of Viet Nam’s timber products.

In 2015, Viet Nam exported wood and timber products worth about US$900 million to the EU, including $270 million to the UK which singly made up 4 per cent of the total timber export turnover of Viet Nam.

In the first five months of the year, the timber export turnover was US$248 million, posting a 42 per cent year-on-year decrease. The exported amount in the period was also reduced 39 per cent from the same period last year to 1.8 million tonnes.

If exports did not improve in the second half of the year, export turnover for the whole year would be less than US$600 million, a reduction of half from last year. The total timber export volume would only be seven million tonnes, which would be equivalent to 60 per cent of last year’s export volume. The country has seen a big inventory of timber, VIFORES said.

Secretary General of the Forest Products Association of Binh Dinh (FPA Binh Dinh), Tran Huy Le told the workshop to discuss the impacts of Brexit from the EU on the Vietnamese wood sector in Hanoi on Thursday that the UK has been the second most important market (after Germany) for wood companies in the central province of Binh Dinh.

The event was jointly held by VIFORES, the HCM City Fine Arts and Timber Processing Association, FPA Binh Dinh, and International Forest Trends.

The UK leaving the EU had already impacted on business orders, he said, noting that some customers demanded price cuts of 5-7 per cent, while others have asked to reduce the number of orders. To Xuan Phuc from Forest Trends said Brexit had caused devaluation of the pound, which negatively affects Viet Nam’s wood export prices.

Additionally, the decreasing demand in house construction in the UK would directly impact on the Vietnamese wood sector, he added. The volume of timber products imported from Viet Nam to the market is likely to reduce in the future, he said.

Several timber and wood product businesses said the export tax of 2 per cent levied on the product from the beginning of the year in the context of abundant supply and decreasing consumption caused difficulties for the industry.

The tax is equivalent to an increase of US$2.5 to $2.8 a tonne. Firms therefore had to reduce purchasing prices for their inputs as well as lower profits to maintain exports.

Timber and wood products have been key export staples of Viet Nam.

He said the government should have an overall assessment of the industry’s situation before levying the tax due to the difference of business scales, input areas and infrastructure.

Deputy Minister of Agriculture and Rural Development Ha Cong Tuan said the industry’s restructure would be vital to improving its export value.

"Viet Nam has been among the biggest timber and wood products exporters in the world. However, the industry has seen unsustainable development."

“The ministry has given priority for the restructure of the timber and wood sector. There would not be sustainable development if the industry is in hot development,” Tuan said. According to the Ministry of Industry and Trade’s Department of Import and Export, Viet Nam’s goods exports to the UK make up about 2.9 per cent of the total export turnover, so Brexit will not affect the exports of Viet Nam much.

The UK was a pioneer in implementing the EU Timber Regulation (EUTR) and negotiating the Voluntary Partnership Agreement (VPA) under the Forestry Law Enforcement, Governance and Trade (FLEGT) for countries exporting tropical timber products to the EU, experts said, adding that Brexit does not affect the FLEGT VPA negotiation between Viet Nam and the EU.

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  • Brexit to affect VN wood sector

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