Although Vietnamese manufacturers are enjoying cheaper imported wood materials due to weakened export demand and stable freight rates, they are steering away from Forest Stewardship Council (FSC) certified products due to how expensive they are.
In fact, manufacturers believe that the risk of FSC-certified raw materials can reduce the revenue of the industry as they enter the final quarter of the year.
Vo Quang Ha, general director of Tavico, told VientamNet that raw material suppliers are standing between two options currently: “Either the imported raw materials cannot be sold because many manufacturers lack orders or – if enterprises do not import raw materials – there will be a shortage of production materials when inflation is controlled and purchasing power recovers. Thus, it is a highly risky time.”
As such, Vietnamese manufacturers are looking at home-grown, certified solutions. However, export markets pay attention to FSC certification and demand such standards on wood products.
“Last year, we contracted La Nga Forestry to supply about 7,000m3 and continue to maintain this volume in 2022,” Ha said. The company is focusing on supplying FSC wood planks to several large buyers, including IKEA. For this, Tavico imports around 200,000m3 of logs annually.
The Vietnamese timber industry currently enjoys benefits from the Voluntary Partnership Agreement on Forest Law Enforcement, Governance, and Trade (VPA/FLEGT) between Vietnam and the EU. It aims to ensure that Vietnam’s wood products are legally produced, contributing to improving forest governance, expanding markets, and promoting trade in sustainable timber and wood products.
However, Nguyen Tuong Van, vice-chairman of the Vietnam Forestry Science and Technology Association, said that the VPA/FLEGT has not had much impact on timber exports to the EU.
The Vietnamese government encourages manufacturers to be more independent on imported timber, but planted forest wood is only suitable for certain kinds of products, according to Ha.
Prices of raw materials have increased over the past few months. This deters manufacturers even more from investing in FSC-certified wood, much to the concern of the proponents of legal timber development. However, foreign buyers find it easier to order from Vietnam.