More than 51% of wood producers in Vietnam have to reduce production

Vietnamese industry – growth disrupted In the recent decade, based on 2 key competitive advantages, including cheap labour (average monthly wage of US$300) and an abundant wood supply (3 million ha. of fast growing acacia plantation and 1 million ha. of rubberwood., Vietnam’s wood and wood product (W&WP) exports have consistently grown at over 10% annually. This growth was maintained during the first two and half months of 2020 when W&WP exports earned US$2.047 billion, a year on year growth of 18%.

With the COVID-19 pandemic spreading in the US (market for nearly 50% of W&WP shipped from Vietnam), Japan (13%), China (12%), EU (10%), South Korea (10%) the well-developed supply-demand chain has been disrupted.

Survey – Impact of pandemic on timber sector A quick survey conducted recently by VIFOREST and local associations including HAWA, BIFA, FPA Binh Dinh Associations with 124 enterprises shows the severe impacts of the pandemic on Vietnamese wood industry.

Huge financial losses by enterprises Responding to the questionnaire circulated by VIFOREST and its associates, 76% of enterprises state that they are facing pandemic damage and the initial loss is estimated at VND3,066 trillion (around US$130 million); 24% of the surveyed enterprises say that they have not identified damage.

Most enterprises have reduced production, some have to closed their factories Over half (51%) of the respondents say that they had to reduce production; 35% of enterprises assume that their business can be maintained for some while, but suspension may not be avoided in coming days; only 7% of enterprises remain operational.

The situation, however, may turn worst at any time because the entire industry live on the orders left from 2019, and no new ones have made in 2020.