Wood processors, with a stockpile of timber and a lack of orders, are struggling to survive the economic slump but a trade pact with Japan and a sharp increase in foreigners visiting a recent fair have restored hopes.
Foreign customers have reduced their orders or asked local producers to cut prices, said Tran Quoc Manh, deputy chairman of the Ho Chi Minh City Handicraft and Wood Industry Association (HAWA). Dang Quoc Hung, director of HCMC-based Kim Boi Handicrafts and Fine Arts Company, said export orders from the US have slumped 60 percent in recent months.
Nguyen Van Thu, director of furniture maker PISICO in the central province of Binh Dinh, said more than 3,000 cubic meters of unprocessed wood, worth VND50 billion (US$2.9 million), are being stockpiled at the company.
Binh Dinh slowdown
Binh Dinh, a major furniture export hub in central Vietnam, is home to more than 100 wood processors. Its wood industry employs around 40,000 workers and has made up nearly 60 percent of the province’s export turnover in the past few years.
Preliminary statistics showed that 20 percent of Binh Dinh-based wood firms have suspended production since mid-February while the remaining enterprises now run only at 40-50 percent capacity.
Most wood processors said they are struggling to seek orders and prices are expected to fall by 8-10 percent.
Though the government is providing a 4-percent interest subsidy on loans to companies that export, import or produce essential goods, many furniture makers said they do not need bank loans now because of a lack of new orders.
As interest subsidies are offered for short-term loans taken only between February and December this year, deputy chairman of the provincial People’s Committee Le Huu Loc said his province would ask the government to also grant subsidies to loans made by wood processing firms before February.
Loc explained that many companies had taken loans before February to buy materials.
The Binh Dinh Province’s Association of Timber and Forest Products suggested wood processors attend international woodwork fairs and try to penetrate new markets such as Russia and the Middle East.
Nguyen Ton Quyen, vice chairman of the Vietnam Timber and Forest Product Association (Vietfores), said as the wood industry is facing many challenges this year, the government should reduce export tariffs to support it.
Some HAWA members such as Scancia Pacific and Duc Loi Company, which have continued to receive orders, have shared them with other association members.
Japan market hopes
Under a new trade pact signed between Vietnam and Japan in January, Vietnam will get duty-free access to the Japanese market for wood products and handicrafts in the next 10 years.
HAWA’s Manh said he expects woodwork exports to Japan to generate more than $700 million in 2010.
Vietnam’s wood product exports to Japan last year were worth $366 million, a 21.7 percent year-on-year increase.
Wood fair positive
At the recent Vietnam International Furniture and Home Accessories Fair (VIFA) 2009 that ended March 14 in HCMC, around 150 domestic and foreign enterprises had 600 booths, up 10 percent from last year’s fair.
Manh said the increase was significant amid the current economic situation.
Organizers said around 600 international delegations, or twice last year’s number, from 58 countries and territories, visited the fair. They expected the increase would translate into more export contracts.
Vietnam is home to 2,000 wood-processing companies, of which around 300 ship directly to foreign countries.
Vietfores’ Quyen said with export turnovers of $2.8 billion last year, the wood industry missed its year target for the first time in eight years. The original target was $3.2 billion.
Vietnam has projected a growth rate of 8-10 percent for wood exports this year, the lowest rate in the past 10 years, Quyen said.
(Thanh Nien Daily)
26/05/2009 02:01:28 PM