In 2024, the wood industry is still in a position of many uncertainties. Illustration photo: D.T

Failure to meet growth goals

According to the Department of Forestry (Ministry of Agriculture and Rural Development), 2023 will be a difficult year for the wood industry when the world economy continues to face many difficulties and high inflation in some developed countries. Governments of many countries have issued many tightening monetary policies, leading to consumers tightening their spending; the Russia-Ukraine conflict continues to be complicated and prolonged, affecting production and business activities of businesses... Consumers in the US and EU markets are tightening spending on non-essential products, including wood products, consumer demand in main export markets decreased sharply, leading to a decline in orders, many businesses had to narrow production scale, even to close door.

Along with that, protection policies of countries to protect domestically produced products and goods also affect Vietnam's trade in wood products. Therefore, in 2023, exports of wood and forest products are estimated to reach USD 14.39 billion, down 15.8% compared to 2022, of which imports are estimated to reach USD 2.191 billion. Although export turnover decreased, the forestry industry still achieved an estimated trade surplus of USD 12.199 billion.

Notably, 2023 marks a very important milestone, for the first time in Vietnam in the forestry sector; procedures have been completed to successfully transfer 10.3 million tons of carbon emission reduction (CO2) to the Carbon Partnership Fund in Forestry through the World Bank (WB) at a unit price of USD 5 /ton of CO2 - equivalent to USD 51.5 million. To date, the Vietnam Forest Protection and Development Fund has received the first payment amount from the WB of USD 41.2 million and has fully disbursed it so that the provinces can urgently make plans to pay the forest owners in this area which consists of 6 provinces in the North Central region.

​Assessing the results of exporting wood and forest products in 2023, Mr. Nguyen Quoc Tri, Deputy Minister of Agriculture and Rural Development, said that in the 2023 plan, wood and forest product exports reach USD 16-17 billion but by the end of December, the new turnover reached nearly USD 14 billion. This is also the first time in the past 20 years that the export target of the forestry industry has gone down. This is a signal that the industry must quickly restructure products from raw materials, products, markets...

Regarding the goal for 2024, Mr. Trieu Van Luc, Deputy Director of the Forestry Department, said that entering 2024, the forestry industry sets a goal and plan to strive for the national forest coverage rate to remain stable at 42,02%; the growth rate of forestry production value reaches 5-5.5%; concentrated afforestation of 245,000 hectares; planted 140 million scattered trees; timber exploitation output from planted forests reached 23 million m3; export turnover of wooden furniture and forest products is USD 17.5 billion... "If the export turnover of USD 17.5 billion is achieved, the export turnover of forest products next year will exceed 21% of the estimate compared to 2023 and exceeding 3% compared to 2022", Mr. Trieu Van Luc said.

Difficult goal

However, according to Deputy Minister of Agriculture and Rural Development Nguyen Quoc Tri, this is a quite high goal, especially in the context of prolonged and unpredictable political conflicts, including output factors and export inputs are difficult.

According to Mr. Do Xuan Lap, Chairman of the Vietnam Timber and Forest Products Association (Viforest), the market is currently showing some signs of recovery, but 2024 still poses some potential risks for the industry. In 2024, the wood industry is still in a position of many uncertainties. Overall, the wood industry will grow but slowly and not much, about 10-12% compared to the last quarters of 2023. Therefore, the most important solution in 2024 is to create an image of Vietnam's wood industry as a sustainable development, based on the basic factor of using certified wood and emission reduction products.

“In addition to difficulties in market output, the industry is facing a number of current issues that directly affect the sustainability of the industry, especially the EU's anti-deforestation regulations and wood products with emissions of low carbon, risks of imported wood materials. Along with the market decline, the new regulations mentioned above show that 2024 may continue to be a difficult year for the wood industry," Viforest Chairman further said.

​Analyzing more closely the difficulties in 2024, Mr. To Xuan Phuc, Executive Director of the Forestry Policy, Trade and Finance Program (Forest Trends Organization), said that about 77% of total export turnover to the EU are items belonging to the wooden furniture group, nearly 23% of the remaining are items belonging to the wood group and selling raw materials. In the first 11 months of 2023, the export turnover of wood and wood products to the EU market decreased by 32% over the same period. "The European Union's non-deforestation regulations (EUDR) will have a significant impact on Vietnam's product export turnover to this market," Mr. Phuc said.

According to Mr. To Xuan Phuc, EUDR sets out two core requirements for wood products to circulate in this market not to cause deforestation and legality. Businesses in the EU have been applying many voluntary sustainable production and consumption standards for wood products, for example products with FSC sustainable forest management certification. At the same time, Vietnam and the EU signed the Voluntary Partnership Agreement between Vietnam and the EU on forest law enforcement, forest governance and forest product trade (VPA/FLEGT Agreement); in which Vietnam commits that all wood products exported to the EU are legal.

"Vietnam is actively legislating and building a wood legality assurance system to control the entire supply chain, including both domestic and export supply chains. According to EUDR, FLEGT-certified wood generally meets EUDR's requirements for legality," said Mr. To Xuan Phuc.