Mr. Do Xuan Lap – Chairman of the Vietnam Wood and Forest Product Association, said that 2023 was a challenging year for Vietnam’s wood industry. Consumer demand in major export markets such as the US and EU dropped sharply, causing a decrease in orders. Many businesses had to narrow their production scale even close.

2023 was the first year that wood exports did not record growth.

According to the General Department of Customs, export turnover in 11 months of 2023 reached 12.1 billion USD, equivalent to 82.5% of the turnover of 2022. If the export momentum remains current, the export turnover of the industry in 2023 will reach 13.5 to 14 billion USD, down 15.5% compared to 2022.

Although the market has shown some signs of recovery, there are some potential challenges in 2024 for the industry. In addition to difficulties in market output, the industry is facing a number of issues that directly affect its sustainability.

First, major export markets increasingly have stricter regulations on the legality and sustainability of the products. Specifically, the EU’s Deforestation Regulation (EUDR), which came into effect at the end of June 2023, stipulates that products imported into this market must ensure legality and not cause deforestation.

Second, there is an increasing demand in both domestic and export markets for low carbon emissions in the supply chain to reach the net zero target. Products with high carbon content will become expensive and lose their competitiveness in the market.

Thirdly, each year, Vietnam imports about 1.5 – 2 million m3 of logs and lumber originating from tropical countries, which have a legal risk, accounting for 30 – 40% of the total imported wood of the whole industry. This not only negatively affects the performance of the whole wood industry but also loses the opportunity to use low-risk imported wood,  especially domestically planted forest wood sourced from millions of farmers.

Mr. To Xuan Phuc – Forest Trends said that about 77% of total exports to the EU are wooden products (HS 9401 and HS 9403), and the remaining nearly 23% are wood products and raw materials (HS 44). In 11 months of 2023, the export turnover of wood and wood products to the EU market decreased by 32% over the same period last year.

The EUDR poses great challenges for Vietnam’s wood processing and export industry.

On June 29, 2023, the EU Deforestation Regulation officially came into effect. The new regulations of this market will have a significant impact on the export turnover of Vietnam’s products to this market.

Mr. Nguyen Chanh Phuong – Vice Chairman and Secretary General of the Handicraft and Wood Industry Association of Ho Chi Minh City (HAWA), said that concerns about the new EUDR not only comes from exporters but also from customer groups (buyers of the EU).

“From the viewpoint of raw material suppliers, countries are now urgently preparing to meet the requirements, such as the supply of raw materials from the US market. Raw material suppliers are very confident in preparing the source of goods,” Mr. Nguyen Chanh Phuong said.

The specific requirements of the EUDR pose great challenges for Vietnam’s wood processing and export industry. It is difficult to prove the origin of wood in Vietnam and even more difficult to prove it in the importing country.

Mr. Do Xuan Lap said that in 2024, the wood industry is still in a context of many uncertainties. So in general, the wood industry is forecast to grow slowly but not much, about 10-12% compared to the last quarters of 2023. The most focused solution in 2024 is to create an image of Vietnam’s wood industry with sustainable development, based on using certified wood and emission-reduction products./.