Why are wood businesses not interested in investing in Nghe An?

Why are businesses not interested in investing?

Nghe An is the province with the largest natural area in the country (more than Thanh Hoa, Lai Chau, Dak Lak) and also the province with the largest forestry land area in the country (1,060,242 hectares, accounting for 71.6% of the province's natural area).

There are 45 wood processing enterprises; 98 non-timber forest products enterprises and 10,410 establishments producing and trading wooden furniture and non-timber forest products.

A big question is: Why is Nghe An the province with the largest forest area in the country, but up to now there are only 143 enterprises processing wood and non-timber forest products; while the whole country has 4,500 enterprises doing business in this field (the number of enterprises in Nghe An is only equal to 3.2% of the total number of enterprises in the whole country).

"Clearly there are still some problems that businesses, especially large businesses, are not interested in Nghe An?" - Mr. Hung raised the issue.

Mr. Ho Xuan Hung - Chairman of the Vietnam General Association of Agriculture and Rural Development, former Deputy Minister of Agriculture and Rural Development said that the number of wood enterprises in Nghe An is only equal to 3.2% of the total number of enterprises in the country. Photo: Viet Phuong

According to the Chairman of the Vietnam General Association of Agriculture and Rural Development, former Deputy Minister of Agriculture and Rural Development, the biggest difficulty in exploiting the strength of forestry products in Nghe An is the transportation system to the high and low mountain areas to develop and exploit forests and forest land.

Especially the system of streams, waterfalls with 117 large and small streams; besides the advantage of high humidity, plenty of water for production and people's lives, it is also a big difficulty for developing traffic and transportation routes during exploitation.

Forest reserves are low, forests have been depleted for a long time, a few with high reserves are distributed in remote areas. Production forests have large areas but are fragmented, household area is too small, from 1 - 2 ha/household.

There are no large enterprises that have made a breakthrough from planting to exploitation and processing, in general, for forest products, especially for creating chain links, and coordination between enterprises and enterprises, enterprises and cooperatives - with households... Wood products are mainly sold as products in nearly 140 million USD of forest product exports from particle boards, accounting for nearly 92.4% (in 2018), so the added value is low.

Provincial leaders and businesses discussed on the sidelines of the wood processing workshop on the morning of March 25. Photo: Viet Phuong

"Nghe An lacks a highly skilled workforce, especially in the production of wood, rattan and bamboo products. Although the province has the most wood in the country, its highly skilled workforce is far inferior to provinces with no or very little forest such as Nam Dinh, Thai Binh, Bac Ninh, Bac Giang... Lacking a comprehensive mindset for developing the forest economy, it is focusing on the mindset of protection, planting and exploitation (mainly wood) from the province to businesses - to the people" - the Chairman of the Vietnam General Association of Agriculture and Rural Development frankly said.

In addition, many policies and policy implementation from the central to local levels are not suitable and not close to reality, especially in land allocation, forest allocation, forest protection and development. Even the clear distinction in protection and use according to the classification of 3 types of forests is also a major obstacle to the development of forest economy in Nghe An in recent years.

Focus on development along the value chain

Nghe An is restructuring its economy along with the whole country, including restructuring the agricultural sector. Although the proportion of agriculture, forestry and fishery currently accounts for only 20.5% of the provincial economy and forestry accounts for only 9.56% of agriculture and fishery, in the long term, Nghe An's agriculture, forestry and fishery still play a very important role, being one of the three spearheads for the province's economic development.

According to Mr. Ho Xuan Hung, with the above advantages and shortcomings being properly recognized, Nghe An needs to develop forest product processing as an important economic sector based on the comprehensive and integrated forest economic development mindset. In particular, special attention is paid to developing along the value chain from protection, enclosure, cultivation, exploitation, and refined processing, aiming at the domestic market and export.

Central leaders and the Department of Agriculture and Rural Development inspect afforestation in Nghe An. Photo courtesy

To develop a sustainable processing industry based on the province's advantages, we must focus on protecting and cultivating forests, trees on forest land and under forest canopy, but must prioritize socio-economic efficiency.

Regarding coverage: This is a “hard” target in all agricultural, forestry and fishery economic development plans from the Government to localities. But it cannot be higher every year than the previous year.

Nghe An needs to clarify the scientific and practical basis to finalize the forest coverage figure, at least until 2030, to have a basis for building a development plan and restructuring the agricultural and industrial sector. Because every 1% increase in coverage means a reduction of 16,000 hectares of land that can grow other plants and animals more effectively. Perhaps the figure given by the Department of Agriculture of 60% coverage is appropriate, we should not compete to increase this index.

To develop raw materials and develop forests, it is necessary to focus investment policies on the seed stage: We must change the traditional thinking in agriculture of "First water, second fertilizer, third diligence, fourth seed" to first seed...

Each district should not have a wood processing factory.

At the workshop, Mr. Ho Xuan Hung said: Through working with the three districts of Ky Son, Tuong Duong, Con Cuong and three companies, they all reflected the situation of selling young forests. A reality is that up to 80% of the area planted by people is cut down and sold young, mainly for chipping. This situation not only reduces income/ha for forest growers but also reduces the added value of wood products.

The main reason is that poor people do not have enough capital to extend the growth period of wood to the period of highest productivity. On the other hand, we have not been able to manage the purchase of young wood by wood chip businesses in and outside the province to serve the goals and local interests of the business.

Fine art wood processing facility at Yen Thanh town industrial park. Photo: Viet Phuong

Therefore, it is necessary to strengthen strict management of businesses competing to buy young forest wood. If the current situation of each district having 6-8 chipping machines located at the forest gates in the districts continues, it will be difficult to have a large increase in wood production to make high-quality, high-value wooden furniture.

Mr. Truong Dinh Tuyen talks about the target of 500 million USD from wood export of Nghe An

(Baonghean.vn) - By 2025, Nghe An must strive to achieve an export turnover of 500 million USD from wood and wooden products. The goal is to promote wood processing in Nghe An, making the province a center for production and export of wooden products in the North Central region.

"It is not possible for every district or cluster of mountainous districts to have a wood and wood products processing factory, but it is necessary to focus on increasing the added value of wood and wood products processing. Stabilize the capacity of wood chip processing factories; paper and pulp processing factories; clean charcoal processing factories. Resolutely not issue new licenses to investors in these types of products.

In reality, in our country, large wood processing facilities are not located near raw material areas, but are often near consumption centers or ports, convenient for traffic routes..." - Mr. Ho Xuan Hung suggested.