Wood processing and export: Wide open opportunities

Implementing the Voluntary Partnership Agreement (VPA) between Vietnam and the European Union (EU) will bring many opportunities for wood processing and exporting enterprises.

To date, Vietnam has completed three rounds of negotiations on the EU Forest Law, Governance and Trade (FLEGT) to ensure that exported products are made from legal timber. Accordingly, only FLEGT-certified products will have access to the EU market. The focus of this action plan is Voluntary Partnership Agreements (VPAs) for wood-producing and exporting countries that wish to eliminate illegal timber in their trade with the EU. Technical discussions, stakeholder consultations and technical assistance are underway with the aim of concluding VPA negotiations by the end of 2014.

Dr. Franz Jessen - Ambassador, Head of the EU Delegation to Vietnam - assessed: Implementing the VPA will bring many opportunities for businesses in exporting wooden furniture. Products will not only continue to be exported to the EU but can also be sold at higher prices as well as have more opportunities to export to other markets, reducing the illegal wood processing in the country, increasing national prestige.

Despite bringing many advantages, many enterprises still have little awareness of the impacts and benefits that VPA brings. According to Mr. Nguyen Ton Quyen - Vice President, General Secretary of the Vietnam Timber and Forest Products Association, up to now, only medium and large wood processing enterprises understand about VPA, while small enterprises, especially small-scale production households, still have no concept of VPA.

VPA has many contents, the most important of which is the text defining wood in accordance with 8 principles, 50 criteria and more than 100 indicators, so understanding all of them is also a big challenge. Besides, there are difficulties in the legal system: "Vietnamese and foreign laws are still very different, complying with Vietnamese law but having to harmonize with the EU, many laws need to be amended and cannot be implemented in a day or two", Mr. Quyen said.

According to the Vietnam Timber and Forest Products Association, 95% of wood processing and exporting enterprises are small and medium-sized enterprises, and FDI enterprises still account for the majority of export turnover. If Vietnam's wood and wood products exports in 2013 reached 5.7 billion USD (up 17.8%), FDI enterprises contributed up to 3 billion USD. Large Vietnamese enterprises in this field are very few, only "countable on the fingers".

To overcome this situation, the Association has piloted regional linkages. According to Mr. Quyen, linking wood exporting enterprises in the region is a good practice that needs to be replicated. However, to implement it effectively, it is necessary to build long-term regulations, including the role of the State, to gradually link wood processing and exporting enterprises, and improve competitiveness.

According to Industry and Trade Newspaper