Handicraft, wood industry to meet $4.2b export target despite hiccups

Despite many difficulties, the handicraft and wood industry has been making efforts to reach the Government’s export target of US$4.2 billion for the year, an industry official has said.

Speaking at a seminar on the industry in HCM City yesterday, Huynh Van Hanh, deputy chairman of the Handicraft and Wood Association of HCM City (Hawa), said that as much as 70 per cent of enterprises involved in the wood processing industry were small, with investment capital of less than VND1 billion.

“They are very vulnerable to changes in macro-economic policies as well as fluctuations in the global economy,” he said.

The current high bank loan interest rate and an increase in input costs have caused difficulties for enterprises in the sector, especially for small – and medium-sized ones, he said.

Hanh said the wood industry estimated to need roughly 10 million cubic metres of timber a year, of which domestic production could provide about 4.8-5 million cubic metres.

Thus, roughly 4-5 million cubic metres of timber should be imported to meet the sector’s demand.

In the past few months, the cost of imported wood materials had surged 15 per cent. Imported chemicals used in wood processing have also gone up by 30-40 per cent, he said.

With export prices remaining the same while production costs were increasing, many wood product exporters had decided not to sign new export contracts.

Hanh said the cost of timber would also increase to obtain legal timber sources, under the EU’s Forest Law Enforcement and Governance and the US’s Lacey Act, which banned the import of any wood products made from illegally harvested timber.

Enterprises would take high risks since they were highly dependent on imported timber and plywood, he said, adding that they needed to know clearly about their timber sources.

Hanh said the Government should offer preferential interest rates on bank loans to support production enterprises.

During this difficult period, businesses should economise on the use of raw materials during their entire production process to cut costs, and to restructure to increase productivity, he said.

Viet Nam earned more than $3.4 billion from exporting handicraft, wood and wood products last year.

There are more than 2,500 wood processing firms employing 250,800 workers in the country, located mainly in HCM City and southern Binh Duong, Dong Nai and central Binh Dinh provinces.

The seminar was co-organised by the Viet Nam Chamber of Commerce and Industry in HCM City, Hawa and Dun&Bradstreet, a provider of global business information, tools and insight. — VNS

Tags: Vietnam Handicraft