In the first two quarters of 2021, exports of wood and wood products from Vietnam increased but due to the pandemic, export earnings will decline in the coming months. According to the Directorate of Customs, exports of wood and wood products in the first seven months of 2021 reached US$9.26 billion, a 57% increase compared to the same period of 2020.
However, since July social distancing and restrictions on movement in many provinces and cities in Vietnam have impacted production. Exports of wood and wood products in July reached nearly $1.3 billion, some 17% down year on year. In the first half of August export earning fell 45% compared to July.
It is possible that COVID-19 restrictions will be in place for some time and this will negatively affect production. COVID-19 control measures affect all sector of the timber industry, especially companies in the main wood processing centers like Binh Duong, Dong Nai Provinces and Ho Chi Minh City.
The response of companies to the recent lockdown has been to reduce the number of workers and reduce or curtail production. Some companies are trying to maintain production at 20-50% of capacity in order to partially meet orders and maintain jobs for employees. Workers from plants that have stopped production are facing an uncertain future.
A recent survey conducted in Ho Chi Minh City, Binh Duong Province and Dong Nai Province by three associations including the Handicraft and Wood Industry Association of Ho Chi Minh City (HAWA), Binh Duong Furniture Association (BIFA) and Dong Nai Wood and Handicraft Association (DOWA) revealed alarming data. By August, 18.5% of association members halted production, 46% of members reduced the capacity and applied the “3 on-site” rule. It was estimated that over 80% of workers in the association member plants had temporarily lost their jobs.
A study conducted jointly by Forest Trends, Association of Vietnam Timber and Forest Product (VIFOREST) and the Forest Products Association of Binh Dinh Province set out two possible scenarios for export in the last months of 2021.
In the first scenario, the study assumed the decline in the first half of August will last to the end of the third quarter. By that time the vaccination roll-out will be underway. As a result, export earnings will begin to recover from the fourth quarter but would only be around 70% of the first two quarter earnings. If accurate, the gross wood product earnings for 2021 will be $13.55 billion.
In the second scenario, the study assumed the pandemic will not be controlled, so in this case the decline in export earnings will continue until year end, such that 2021 earnings would be only $12.69 billion.