According to the General Department of Customs, Vietnam earned $2.88 billion in exports from wood and wooden items in the first quarter of this year, down over 28 per cent on-year.

Weakening global demand has resulted in a sharp fall in orders, the problem exacerbated by continued high borrowing costs, leaving firms in dire straits.

Nguyen Van De, general director of Ho Chi Minh City-based Sofa Vina Co., Ltd., said multiple hardships currently face the wood and timber industry and firms will soon be severely affected by falling revenue and increased borrowing costs.

“Many wood production firms have to borrow at 9-10 per cent interest. I am aware of the support policies on lending on offer from the state, but the associated requirements are ambiguous,” said De.

Meanwhile, To Dang Trung, director at Cung Viet Co., Ltd. based in the southern province of Binh Duong, revealed that instead of seeking bank loans, his company has turned to financial leasing firms despite incurring a much higher interest rate due to their more flexible lending criteria.

"For instance, when the company needs to procure a machine package worth around $450,000, the financial leasing firm lends out 70 per cent of the package value and accepts the machine as collateral," said Trung, "Banks won’t accept this as they only accept land or property assets as collateral."

Under mounting pressure from the market and rising interest rates, many firms are doing what they can to survive, with many choosing to refocus on the domestic market.

Furniture manufacturer Savimex is diversifying its destination markets, broadening its reach in Europe while also promoting the brand locally. Furthermore, the company is teaming up with strategic partners to ensure a stable supply chain at competitive prices to ensure its capacity to meet urgent or large orders.

To Dang Trung from Cung Viet suggests the State Bank of Vietnam should increase the available credit to businesses and disburse capital to the sector's major firms, allowing for payment to trickle down to smaller businesses.

“Lending to the big firms is necessary. Several hundred thousand dollars is unremarkable to these firms, but is quite significant to small- and medium-sized enterprises like ours. The market urgently needs action to get things moving,” said Trung.