As much as 80 per cent of timber buyers from the U.S. and EU have delayed or cancelled their orders as of March 30 due to new coronavirus.
The cancellation and delay rate from South Korea and Japan buyers is an estimated 60 to 80 per cent. This can potentially wreck severe damage to Vietnam’s timber industry this year, the Association of Vietnam Timber and Forest Product (Viforest) said.
Vu Hai Bang, CEO of Woodsland, one of the largest timber exporters in the country, said that within two weeks, many buyers in the U.S. and E.U. had cancelled their orders, and he would have to wait another seven weeks for orders to hopefully reboot.
Nguyen Duc Kien, deputy director of Kego Co. Ltd., which exports plywood to South Korea and Japan, said the company now exports five containers a month, compared to 50 before the pandemic. There is no new orders placed for May onwards.
In a survey of 124 wood exporters conducted by VIFORES, more than half of them have to scale down their business due to the pandemic.
Most businesses will have to stop operations by the end of April
Most businesses will have to stop operations by the end of this month, the association said.
Firms estimate a total damage of at least VND3 trillion (US$128 million) due to the cancelled or delayed orders.
Respondents said over 21,400 employees are already temporary out of work, and VIFORES estimates that hundreds of thousands in the industry may become unemployed as wood craft villages across Vietnam employ over 350,000 people.
Cancelled orders are also putting more pressure on finances. Bang said Woodlands will struggle to pay its debts from April to June.
Timber exporters allowed to delay tax payment and land rental by five months
Deputy Minister of Agriculture and Rural Development Ha Cong Tuan said timber exporters are allowed to delay their tax payment and land use fees by five months according to government policy.
Wood industry tries to survive during COVID-19
Amid an array of difficulties caused by the COVID-19 pandemic, the wood industry is exerting every effort to maintain business and production, while implementing initiatives and defining strategic lines of products and markets.
A survey of 124 wood processing enterprises on the impacts of the disease found that the sector’s export turnover and growth are likely to drop sharply in the near future.
Up to 76 percent of enterprises said that the sector is likely to suffer total initial losses of 3.06 trillion VND (131 million USD), while the remaining said they have not yet determined the level of losses.
Only 7 percent of the respondents said they are maintaining operations as normal. Meanwhile, 51 percent reported that they had scaled down production, and 35 percent said they will have to suspend operations in the coming time.
According to Chairman of the Vietnam Timber and Forest Product Association (VIFORES) Do Xuan Lap, while most wood firms had to narrow their production scale, some are still maintaining production thanks to stable lines of products in key markets.
To Xuan Phuc, an expert from Forest Trends, commented that although the pandemic will end, but the operation of the wood industry cannot go back to normal.
The sector should change the identification of strategic lines of products and markets to ensure sustainable development as well as promote links among businesses and develop the supporting industry, he suggested.
Vietnam’s export value of wood and wooden products reached 2.7 billion USD in the first quarter of 2020, representing a year-on-year increase of over 16 percent, according to the Ministry of Agriculture and Rural Development.
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