Pandemic shaves off up to 80 percent in orders for timber, refined wood

06:00 | 01/05/2020 Industry

(VEN)- The Covid-19 pandemic is expected to virtually halt all orders from the Vietnamese timber and wood refining industry until the end of 2021.

pandemic shaves off up to 80 percent in orders for timber refined wood

According to the Vietnam Timber and Forest Product Association (VIFORES), the five main importers of Vietnamese timber and wood products, including the US, the EU, Japan, the Republic of Korea (RoK), and China, which account for more than 90 percent of the industry’s export value, are all severely affected by the pandemic. Vietnamese wood refining enterprises keep receiving notices of order cancellations or delays. Specifically, since March 2020, 80 percent of purchasers of export products to the US have cancelled their orders as have 81 percent of exporters to the EU. Sales to Japan, the RoK, and China dropped 60-80 percent.

To maintain the remaining and small orders, businesses have to buy raw materials at a price US$10-20 higher than in the past per cubic meter, which is attributed to lack of workers and empty containers. Freight costs that soared US$500-1,000 per container are expected to further increase in the coming months.

Customers are not coming to Vietnamese timber enterprises to sample products and therefore they have not signed new orders for the 2020-2021 period. Many factories are at risk of closing and hundreds of thousands of their workers are in danger of unemployment.

VIFORES Chairman Do Xuan Lap said wood refining, one of Vietnam’s three key export industries, is facing the risk of halting production at the end of April and will likely be unable to pay employees without strong government support.

To save the industry that brought in tens of billions of US dollars in export value each year, the VIFORES chairman proposed that the government extend tax and land rent payment time for the timber and wood refining sector, consider value-added tax (VAT) refunds for certain exporters, apply export tax exemption to sawn timber products imported from countries and territories with good forest governance such as the EU, the US, Canada, and Japan. He also suggested VAT exemptions and reductions and payment extension, and zeroing the two-percent export tax imposed on woodchip exports.

The wood and wood refining industry is expected to face difficulties for the next three to six months, or even longer. Industry businesses are focusing on minimizing costs, including the cost of purchasing raw materials.

Thanh Ha