Wood enterprises on evfta “highway”

When the EVFTA takes effect, the wood sector will benefit when the import tax to the EU reduces to 0% and the import tax on EU’s machinery and equipment to Vietnam also reduces sharply. However, the advantages are not clear. Although the tariff is reduced to 0%, existing taxes the company is being imposed are also nearly 0%.

The enterprise has managed around 70%-80% of raw materials domestically, so although import tax is reduced, importing raw material wood from the EU market will be limited.

MANY REGULATIONS OF GOODS ORIGIN IMPOSED

As the agreement takes effect, EU will require wood products to ensure origin (including imported wood and domestic wood). According to Minh Duong Furniture Corporation: “Currently, the world is based on FSC and Minh Duong has FSC certification. In fact, we buy 100% legal timber, wood imported from the US”.

According to Minh Duong Furniture Corporation, it is not easy to have the certification due to complicated procedures, which need verification from growers, manufacturers, wood processing factories, wood delivery centers, funiture producing factories, partners and customers selling finished products.

Minh Duong Furniture Corporation shared: “In fact, to control the above chain of processes is a difficult task for furniture manufacturers because the company only buys wood directly from suppliers and distributors. traceability of material wood to the origin and having FSC certificate to all factory partners will require a great effort from all sides.

Another issue is the use of wood with FSC certificate will push the price much higher. It will be difficult for enterprises to compete in term of prices and it will be also difficult for customers to consume these products on markets.

ENTERPRISES SHOULDCHANGE FOR BETTER BREAKTHROUGHS

In terms of tax, the EVFTA will not have too much impact on Vietnam’s wood sector. However, besides taxes, it includes other fields as infrastructure development, eliminating barriers in business operations, public investment expansion, intellectual property,... The implementation of the agreement will bring great changes to the fields in the future. At the same time, the agreement will have potentials to promote and expand markets for Vietnam’s wood products.

Many wood enterprises have currently had production innovation and improvements of their competition abilities for export boost,... Minh Duong Furniture Corporation is focusing on overcoming consequences from the pandemic of COVID-19 for continuing cooperation with their existing businesses from Europe. In long-term, it will maintain and strengthen their competition abilities by improving their abilities of production, management and business. It will find more standardized suppliers for wider cooperation and new customers.

In addition to enhancing their competition abilities, Vietnamese wood businesses are recently stepping up in selling products on global e-commerce sites. The breakdown in the export supply chains due to the limitations of social isolation in recent years shows that the Vietnamese wood sector needs to accelerate the change of sales methods- a proper move for current time.

The EVFTA will be a solid foundation for sustainable developments in the world’s unstable situations. It will help Vietnam to improve their legal frame, institution and create bi-lateral trade corridor that helps Vietnam’s wood enterprises enhance their competition abilities for higher position in the world market.

The Government, ministries and sector should pay more attention to the community of Vietnam’s wood business and help them to change technology and to have particular plan for product design and branding of Vietnam’s wood products.