The wood industry expects export turnover to exceed $16 billion in 2024

DNHN - This is the assertion of Mr. Ngo Sy Hoai. He expressed confidence that with the improvement of the global economy and market conditions, demand for wood products will be boosted and export turnover will reach over USD 16 billion for the year.

At the recent seminar "Developing green logistics, adapting quickly" organized by the Business Forum Magazine, Mr. Ngo Sy Hoai, Vice Chairman and Secretary-General of the Vietnam Timber and Forest Products Association (Viforest), shared prominent information about Vietnam's wood industry. He stated that Vietnam currently ranks 5th in the world for total wood export turnover and 2nd in the world, only after China, for high-value wood products, including indoor and outdoor furniture.

According to Viforest, Vietnam's wood exports have reached 170 markets globally, with the five largest markets—USA, Japan, China, South Korea, and the EU—accounting for over 90% of export turnover.

"Specifically, the US accounts for nearly 40% of the total export turnover of Vietnam's wood industry. If the US imports 10 chairs, four of them are 'made in Vietnam’,” Mr. Hoai noted.

Mr. Hoai shared with reporters that the wood industry has shown commendable recovery and growth compared to other sectors in the first half of the year. Specifically, in the past six months, Vietnam exported USD 7.8 billion worth of wood products, reflecting a growth rate of over 21%. Several major markets such as Japan, the USA, China, and South Korea have all seen significant growth.

Despite the positive changes in market demand, the wood industry still faces challenges, particularly with the surge in ocean freight rates. Mr. Hoai explained that this issue arises from various factors, including tensions in the Red Sea and a shortage of ships and empty containers.

"Currently, businesses report that ocean freight to distant markets like the US and the EU has increased to USD 7,000-8,000. Just a month ago, it was only USD 3,000-4,000. This rapid increase in freight rates causes difficulties for wood enterprises, as they heavily rely on exports. The rising freight costs force foreign importers to renegotiate prices, adding pressure to share the risk caused by increased freight rates. This situation is detrimental to Vietnamese wood businesses, as the logistical costs, especially for ocean transport, are very high. Given the current shift towards green production and trade, green logistics is a significant issue, particularly for wood enterprises", Mr. Hoai assessed.

In addition to the challenges of rising ocean freight costs, wood enterprises are also struggling with VAT refund procedures. Mr. Hoai noted, "Media and press have supported wood enterprises, as they are the group most affected by VAT refund delays. Over the past two years, the Prime Minister and the National Assembly's Finance and Budget Committee have held discussions and issued directives to improve the VAT refund situation. However, difficulties remain due to the complex and lengthy supply chain in the wood industry, from farmers planting forests to intermediaries and processing facilities, and finally to export enterprises. VAT must be paid upon export, and the refund process is lengthy and cumbersome."

Mr. Hoai proposed that only links in the supply chain where VAT arises should be subject to traceability, while farmers, who are exempt from VAT, should not require traceability. "We understand the challenges faced by tax authorities, as there have been cases of fraud, but this should not cause VAT refund delays and harm law-abiding businesses. Currently, all enterprises want to comply with the law, but the lengthy and complex supply chain sometimes makes compliance difficult", Mr. Hoai shared.

Assessing the growth potential of the wood industry in the second half of the year, Mr. Hoai expressed optimism that with the global economic recovery and improved market conditions, especially in the US, where many expect the Fed to lower interest rates in September, consumer demand will increase. Furthermore, in the latter half of this year, Viforest anticipates that the growth rate of wood product export turnover will rise even higher. For the whole year, Viforest forecasts that Vietnam's wood and wood product export turnover will exceed USD 16 billion, a positive figure. "Previously, we feared that the entire year's export turnover would drop to a low and remain there for a long time, but fortunately, the recovery seems faster than expected, and the wood industry's growth will continue into 2024", Mr. Hoai concluded.

Bao Bao