Ms. Thanh is really frustrated, reports Thoi Bao Kinh Te Saigon.  The cost of the wood her furniture company needs -- local rubberwood and fir wood imported from New Zealand -- has gone up by 20 percent already this year.   In a situation where all their costs have been increasing, Thanh adds, the sudden jump in lumber prices has created big problems for the furniture makers of Dong Nai province.

Timber prices up, why?

Sources confirm that the timber prices have been increasing steadily since January. The prices of rubberwood and acaciawood, for example, have increased by 20 percent to four million dong per cubic meter.  The cost of fir wood from New Zealand is up fully 35%, to 4,6 million dong per cubic meter.

The same sources said that it’s Chinese buyers, rushing to seek timber materials in Vietnam and neighbouring countries, that are putting pressure on prices.

Nguyen Huy Cuong, the owner of Hoang Lien workshop, which pre-processes rubberwood for supply to factories in Dong Nai province, says that local stocks of sawn timber are depleted because Chinese businessmen come every week to purchase timber and export it to China.  “The Chinese businessmen have been buying all the timber we have.  They do not pay much attention to size and quality. This has been going on for two months.”

It seems that the Chinese businessmen do not care much about the prices. Their methods are simple: contact Vietnamese workshops by phone, pay with cash and then take the timber away immediately.  Understandably, the timber merchants like to sell to them.

Ms. Thanh says that although timber prices have been increasing weekly, the quality of sawn lumber is very bad. However, timber providers do not care.  If domestic enterprises refuse to purchase bad quality timber, they can unload it on the Chinese buyers at high prices.

Hiep, a director at the Minh Phat 2 company in Binh Duong, explains China has poplar timber, but it is inferior in quality to Vietnam’s rubberwood.  The poplar products are not favoured by the US clients. Therefore, the Chinese businessmen have flooded into Vietnam in quest of rubberwood.  Though they are paying higher-than-normal prices for it, the price they pay is still twenty percent less than the cost of rubberwood in China.

Association calls for tightened export management

The HCM City Handicraft and Wood Industry Association (HAWA) has sent an urgent petition to the Ministry of Industry and Trade and other ministries, requesting tighter timber export management

According to HAWA, timber exports are chronically misclassified.  Wood that has only been preliminarily treated is being declared as finished products to enjoy a zero percent export tariff.

The furniture company executive, Hiep, says that customs officials must have clear guidance that enables them to differentiate finished products from preliminararily treated timber, to prevent the Chinese enterprises from evading tax and help Vietnamese furniture makers overcome difficulties

Hiep adds that if the cost of wood and other expenses remains up by ten or fifteen percent overall, Vietnam’s furniture exporters will have to increase their prices, making our products less competitive in the world market.