VietNamNet Bridge – Wooden furniture manufacturers, in an effort to take initiative in
their business plans, have been trying to develop material growing areas.
However, it is unclear when the idea can turn realistic.
The rapid development of the wooden furniture industry
and handicrafts has led to the sharp increase in the demand for timber
materials. At present, more than 80 percent of materials for processing
factories are the imports.
Every year, Vietnam has to import 1.5-2 million cubic
meters of timber. In 2011, Vietnam exported 1.3 billion dollars’ worth of wood,
while it gained 4 billion dollars from wooden furniture exports.
The story of Truong
Thanh
The timber material shortage was foreseen many years
ago, when Vietnam began boosting wooden furniture exports. Therefore, five
years ago, the Truong Thanh Furniture Corporation (TTFC), when deciding to set
up more wood processing factories in many localities in the country, it also planned
to grow forests as well.
TTFC, which strived to make wooden furniture products
with 100 percent of timber from its forests in the future instead of having
import timber from Africa, has caught the attention of a Japanese investor.
As a result, in late 2011, the Truong Thanh Oji (TTO),
a joint venture between TTFC and Oji Group, a Japanese afforestation and paper
producer, was established with the chartered capital of 7 million dollars. The
initial goal of the joint venture is to grow 17,890 hectares of forests in Phu
Yen province.
In Vietnam, TTFC has been well known as the leading
wooden furniture manufacturer and exporter. According to Vo Truong Thanh,
President of TTFC, the corporation has been pushing up the afforestation
projects in Dak Lak (5000 hectares have been grown out of the planned 50,000
hectares), Dak Nong (500 hectares) and 40,000 hectares in Phu Yen.
It’ll be a great
challenge to develop forests
Thanh has admitted that TTFC, like other Vietnamese
enterprises, still does not have experiences in afforestation, suitable
technologies and sufficient finance capability.
Experts also say that Vietnam’s experiences in the
field are just enough to help re-green uncultivated land and bare hills, while
not enough to carry out the high-yield afforestation for commercial purpose.
Therefore, teaming up with a Japanese investor was the
way TTFC chose to follow to take full advantage of the financial capability,
technology and experience of the Japanese partner.
Experts have also said that there has been no thorough
research work about the afforestation methods, seeds, yield, insects and fire
prevention measures. Therefore, they still have doubts about the feasibility of
the afforestation projects, even though the Ministry of Agriculture and Rural
Area (MARD) has vowed to develop afforestation projects with FSC certificate
(forest stewardship council).
Under the forestry development strategy by 2020
approved by the government, Vietnam needs to have 2 million hectares of new
forests to satisfy the demand for timber materials and obtain the forest
coverage level of 47 percent across the country.
In order to implement the program, Vietnam would need
tens of trillions of dong, of which 60 percent is expected to be mobilized from
the public and investors.
However, potential investors, both domestic and
foreign, now find it hard to approach the land fund reserved for growing
forests for commercial purpose.
A MARD’s report showed that in the whole year 2011,
only 200,000 hectares of forests, not including preventive, special-use forests
grown with the state sourced money were developed.
Meanwhile, the forest plantation has been slowing
down. In the first eight months of the year, less than 100,000 hectares were
developed.
Compiled by Kim Chi
Business & Investment Opportunities
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