VietNamNet Bridge - The HCM City Fine Arts and Woodworking Association predicted that Vietnam may reach $7.6 billion from timber and wooden exports in 2016, an increase of 10 percent compared to 2015. 

Meanwhile, experts have repeatedly warned of the danger of falling behind other regional countries.

Vietnam urged to beware of investments from China

According to Nguyen Ton Quyen, deputy chair of the Vietnam Timber and Forest Product Association (Vietforest), Vietnam’s wooden products are present in 120 countries and territories. 

However, the products are mostly sold at FOB (free on board) prices instead of CIF (cost, insurance, freight). FOB price is much lower than CIF, which is a problem for many enterprises. 

The low sale prices force Vietnamese enterprises to pay less to their workers than foreign invested enterprises. This will be a serious problem in the time to come, when Chinese wooden furniture manufacturers flock to Vietnam to enjoy preferential tariffs from the Vietnam-EU free trade agreement (FTA) and TPP.

The low sale prices force Vietnamese enterprises to pay less to their workers than foreign invested enterprises. This will be a serious problem in the time to come, when Chinese wooden furniture manufacturers flock to Vietnam to enjoy preferential tariffs from the Vietnam-EU free trade agreement (FTA) and TPP.

Vo Truong Thanh, chair of Truong Thanh Corporation, confirmed that FTAs will bring great opportunities to Vietnamese enterprises, but will also pose great challenges, because they will have to compete with enterprises from China and Thailand which set up production bases in Vietnam to enjoy benefits from the FTAs.

Meanwhile, sources said Vietnam’s wooden furniture exports to the US may face an investigation after US newspapers reported that China have tried to export products through Vietnam to avoid anti-dumping duties.

The director of a Binh Duong-based enterprise said foreign enterprises try to avoid tax by setting up factories in Vietnam or teaming up with Vietnamese partners to set up joint ventures. 

The factories and joint ventures in Vietnam import semi-finished products from their home countries and then implement additional simple work in Vietnam before shipping them as 100 percent Vietnamese products.

“This is an extremely serious problem for the Vietnamese business community,” he commented.

Challenges

Low prices have made Vietnam's exports highly competitive in the last 10 years. However, experts say Vietnam should no longer rely on price as the key to competitiveness.

The biggest difficulty for wooden furniture manufacturers now is that they must find timber from legal sources to be able to export products to the US and EU, which consume 50 percent of its exports.

This means that manufacturers will have to be more selective in importing wood for processing, and if they do, the price will increase.

Nguyen Thi Thu Trang, director of the WTO Center belonging to VCCI, said that if Vietnam does not create policies to support wooden furniture enterprises, the achievements in the industry gained in the past will no longer exist.


Nam Lich