Opportunities and risks of Vietnam’s timber industry in the current context

LEC Group – In the intense US-China trade war, Vietnam is one of the beneficiary countries. However, accompanying the benefits is always the risk of stalking. So in fact, in this escalating trade war. How will the Vietnamese wood industry achieve opportunities and risks? Follow this article to get yourself the most accurate information!

Opportunities for Vietnam’s wood industry

When the US-China trade war is on the rise as it is today. Vietnam is a country that has the following opportunities for timber industry:

• Vietnamese wood resources will be exported to the US (mainly) and China. In order to fill the gaps of import and export goods between the two powers formed by this war.

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• From the second half of 2018, the export turnover of Vietnamese wood products to the US increased rapidly. Since the tax imposed on wood products exported by China to the US and the opposite direction began to escalate.

• There is no sign of remission in this war. Because President Trump’s government can continue to impose new taxes on China’s $ 300 billion packages of goods exported to the US. This means that Vietnam’s wood industry will continue to benefit in the future.

• With products exported to the US, there are mainly high value-added wood products. Vietnam’s export wood processing industry has the opportunity to restructure export products. Pushing up the proportion of exports, pushing the proportion of export of high value-added products, reducing the proportion of wood materials.

• In addition to benefiting from the expansion of new US monos. But there is also an opportunity to expand FDI attraction into the industry.

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• With advantages such as cheap labor, convenient transportation, infrastructure, close to deep-water ports. Vietnam has become a new destination for investment projects in the wood industry. With investments mainly from Chinese capital and from other countries that have production activities in this country.

• Increasing FDI investment in the wood industry directly contributes significantly to industry growth, creating jobs and increasing budget revenues.

Risks of Vietnam’s wood industry

In addition to the above opportunities, the US-China trade war together carries the following risks:

• For FDI projects, especially projects with capital from China registered in Vietnam in the past time. This may be the strategy of Chinese companies to avoid export taxes on the US market.

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• In addition, without good control mechanisms for the quality of investment projects. Increasing FDI investment from China can lead to environmental consequences as experts warned.

• Risks from exports to the US are formed if products from China are imported into Vietnam, through preliminary processing or without preliminary processing, obtaining certificates of origin from Vietnam and then exporting to the US to avoid taxes. This is a commercial fraud that can cause great harm to Vietnam’s wood industry.

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• Increasing the deficit in the trade balance, including a deficit in trade in wood products between Vietnam and the US. Can also be the cause of new risks for Vietnam in general and wood industry in particular.

The above is an overview of the opportunities and risks of Vietnam’s wood industry in the current US-China trade war. Any questions you can contact LEC Group experts for best support and answers!

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