Vietnam has about 2,520 wood processing establishments, of which 420 are foreign-invested, according to the association. The export target for this year is $3.2 billion for 2010. Thanks to last year’s export value of $2.8 billion, the industry became the fifth largest wood product exporter in the world after mainland China, Malaysia, Indonesia and Thailand. Vietnamese wood furniture products are exported to 120 countries, of which the US imports up to 30 percent of the country’s total wood furniture and forestry product value.

The US is Vietnam’s biggest importer of wood products, with the EU and Japan together representing 55 percent of imports. Among the many local wood exporters, Khai Vy is one of the most successful with four plants employing 4,800 workers and exporting more than 500 containers of wood furniture each month.

 
Fewer orders

Despite the success of last year, the global recession has lowered the purchasing power of the US and EU markets by 30%, and as a result fewer export contracts have been signed.

A representative of the southern Binh Duong province’s Department of Trade and Industry said that about 95 percent of Vietnam’s wood furniture exporters faced difficulties because their partners had cancelled or reduced import orders.

 
Contracts have fallen between 30 percent and 60 percent recently, compared to the same period last year, putting many companies on the brink of bankruptcy.

 
Quyen also Said that only 50 percent of those involved in the wood processing industry could withstand the downturn and the remaining half were in a danger of bankruptcy or experiencing severe hardships.

 
Cung Quang Binh, director of the Binh Nguyen Wood Furniture in northern Bac Ninh province, said his company exported all of its products to China but over the last few months, the market became frozen. "To survive, we have had to reduce the number of employees from 100 to 40," Binh said.

 
Bac Ninh province has more than 300 wood processors, most of which are making wooden handicrafts. In previous years, they could earn $50 million in export value annually, but the figure has dropped 70 percent this year, according to Nguyen Van Khanh, chair of the Bac Ninh Timber Association.

 
Solutions

 
Industry insiders said that to realise the export value targets, the government should temporarily stop collecting export taxes on wood, products during a time when the market is fluctuating wildly.

 
Wood processors’ debts should also be extended and the government should allow wood processors to pay less in corporate income taxes or delay their payments. In addition, companies should be provided with easier access to loans to have enough working capital for production activities.

 
Industry insiders said the government must have more preferential policies to encourage domestic and foreign enterprises to invest in the wood industry to modernise production technology and improve the quality of products. The timber association has been asked to strengthen trade promotion activities and therefore create opportunities for domestic wood enterprises to penetrate new overseas markets. The association should encourage each company to be responsible for one process, including wood material supply, production or export.

 
To ensure sustainable development, experts said wood enterprises must pay more attention to the domestic market to fully tap its potential, particularly when export markets are soft.

 
A recent survey of 210 families in urban areas made by the timber association shows that each Vietnamese family spent 3 million dong ($166) on average for wood products per year while guesthouses and hotels paid 12 million and 30 million dong respectively. The number of new guesthouses and hotels increases year after year, requiring large volumes of wood products, Quyen said.