Vietnam faces lumber shortage as Chinese buying continues

The price of several wood species has gone up in Vietnam, creating pressure on the domestic wood industry as massive buying from Chinese companies continues with no respite.

Large quantities of rubber wood and acacia in central and southern Vietnam have disappeared into Chinese hands, pushing prices up by as much as 20 percent as a result. Tay Nguyen province has lost about 90% of its rubber wood supply since last September and prices have gone up 20 – 30 percent, said Do Xuan Lap, chairman of Binh Dinh Timber Association.

The scarcity has led to fierce competition for raw material, increased product prices, and could stunt growth, prompting the Vietnam Timber and Forest Product Association (VIFORES) to submit a petition to the government for a resolution.

Vietnam’s geographical advantage, cheap labour and a well-developed transportation network are major draws for Chinese businesses, which could see increased investments in the wood industry in future, To Xuan Phuc, a senior policy analyst at Forest Trends, commented.

China imposed a blanket ban on commercial harvesting of natural forests effective 2017. Forests in 14 provinces will be closed this year, resulting in a shortage of 49.94 million cubic metres of wood for domestic consumption and export.

Other issues include finalising the tax rate on lumber of different thicknesses to combat fraud as well as a much-needed policy to encourage locals to help with afforestation efforts.

Vietnam’s total wood exports to China reached US$965.8 million, nearly 75% compared to the same period in 2015.

Source: Viet Net