Raw material shortage in furniture export sector

Wood furniture is fast becoming a key export product from Vietnam, showing signs of strong growth with monthly export revenues hitting an average of $500 million in the first three months of the year.

Workers of Satimex Company processing furniture goods for export (Photo: SGGP)

This year there is possibility that export revenues can reach US$5.5 billion, an increase of nearly $41 billion compared to 2012.

However, according to the Ministry of Agriculture and Rural Development, the country has not taken the initiative to produce its own raw material but has to import from other countries; hence growth in this sector cannot remain stable.

The country is striving to reduce import of raw wood. In 2012, around 66 percent of raw wood was imported, but in the first few months of 2013 this decreased by 30 percent as compared to the same period last year.

Ha Cong Tuan, deputy minister of Agriculture and Rural Development, said around 400,000 cubic meters of wood per year had been used up in the last 10 years ago, but in 2012 this went down to 15 million cubic meters.
 
Calculations show that the wood furniture export sector needs around 22 million cubic meters of wood for manufacturing by 2020. With more than 2.5 million hectares in the country, there is supply of around 16 million cubic meters till 2020, not including outside sources. The government now plans to seal off natural forests for a time by 2014.

On the flip side, most of the forests planted are in the North and the central regions, where most of the wood manufacturing factories to export wood furniture have been mushrooming without future planning.

These factories are facing severe shortage of material now, and as a result are resorting to using immature trees for making furniture. This has led to low quality products and customers are taking advantage of this situation to offer lower prices.

A ton of wood chips cost VND500,000, while a ton of wood planks are four times higher. As a result, Vietnamese furniture products are unable to compete in the market.

Another paradox is that the Vietnam Paper Corporation exported more than 606,000 tons of wood chips at $125 per ton instead of using 65,000 tons of paper pulp, and then imported paper pulp at $1,000 a ton.

By Cong Phien - Translated by Uyen Phuong

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