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Vietnam turns foreign wood into hot forex earner

Vietnam has been importing more timber for furniture production as it clamps down on logging, trade officials said on Tuesday, ensuring the Southeast Asian nation protects its earnings from the lucrative sector.

Furniture makers were buying timber under long-term contracts from the United States, South Africa, Australia, New Zealand and several northern European countries, said Truong Duc Quang, deputy head of the Trade Ministry's Export Import Department.
"Wood exploitation from natural forest has been banned and each year the government only allows 300,000 cubic metres of wood to be taken from the forest, just 50,000 of which are for export," Quang told a news conference in Hanoi.

Widespread deforestation prompted the government in 2003 to curb logging from natural forest except for production of fine arts for export and for disaster management. Hanoi said it also encouraged wood imports.
Furniture is Vietnam's sixth biggest export earner after crude oil, textiles, footwear, electronics and seafood.

Manufacturers will import more wood from the United States and export the finished products there to enjoy U.S. preferential treatment for the raw materials purchased, Quang said.     
Vietnam, which imports 90 percent of its raw materials for furniture production, has targeted a one-third rise in sales to $1.4 billion from the export of furniture and wooden products this year.

Last year, exports surged 85.9 percent to $1.05 billion, mainly to the United States, Japan and Europe.
Shipments of wooden products in the first half of the year were estimated to have risen 44.6 percent to $712 billion versus the same period a year earlier, the government said.
Imports of wood and wooden accessories jumped 32.6 percent to $288 million over the same period. Indoor, outdoor products

Exporters were also shifting to the manufacturing of higher-value bedroom and interior furniture, rather than outdoor products of lower value, to raise turnover, Quang said.
The increase in furniture exports over the past two years had been mainly due to the rising numbers of sub-contracts for Taiwanese and Northern European companies, industry experts said.
"At the initial stage we used the ability of marketing and business connections of foreign firms to be their sub-contractors. But now we have started making our own products with own design," Quang said.
Ho Chi Minh City's Trade Department will organise an international fair in October to raise business opportunities, with 100 foreign companies expected to participate.

The Trade Ministry has however, warned exporters about anti-dumping lawsuits should they fail to control export expansion, Quang said, adding that the United States last year imposed anti-dumping measures against Chinese furniture imports.

Vietnam has already stopped licensing its manufacturers who execute sub-contracts involving polishing, painting and assembling wooden products for Chinese re-exports to the U.S.


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