Experts warn of trade fraud risks in wood industry

Foreign direct investment (FDI) in the wood processing industry is on an upswing, but it should be tightly controlled to avoid trade fraud.

 

FDI inflow into Viet Nam’s wood processing industry had increased rapidly, with China, Japan and South Korea among the largest investors, according to the Foreign Investment Agency under the Ministry of Planning and Investment.

In the first nine months of this year, more than US$580 million for 67 new FDI projects in the wood processing industry was registered in Viet Nam.

The amount was 2.3 times higher than the total registered in the whole of 2018.

China led the list of countries investing in the industry with 40 newly-registered projects, accounting for over 60 per cent of the sector’s total FDI projects.

However, experts warned that enterprises should be alert to opportunities and potential risks.

This matter was raised during a seminar held last week in Ha Noi.

FDI firms were contributing significantly to Viet Nam’s exports of wood products, with turnover reaching $3.96 billion in 2018, equivalent to 46.7 per cent of the sector’s total export value, To Xuan Phuc, an expert from Forest Trends, an international non-profit organisation promoting sustainable forest management, told the seminar.

Phuc said the US-China trade war could create new opportunities for further FDI expansion in the wood processing industry in Viet Nam. However, Viet Nam was facing trade fraud in the field, which posed risks to the industry, he said.

Some FDI enterprises are investing in Viet Nam to avoid duties and change the origin of their products instead of doing business honestly.

In reality, some wood processing factories in Viet Nam have been bought by Chinese enterprises in the form of shares to produce products with Vietnamese origin, then export them to the US.

According to Tran Thi Thu Huong from the Viet Nam Chamber of Commerce and Industry, the time for granting certificates of origin (C/O) for wood enterprises was slower than for those operating in other fields, aimed at preventing trade fraud in the sector.

Nguyen Ton Quyen, vice chairman and secretary general of the Viet Nam Timber and Forest Product Association, said Viet Nam’s wood export had reported stable and sustainable growth.

The last two months of the year would be the time for the industry to promote exports towards reaching the target of $11 billion in export turnover, Quyen said.

He also pointed out difficulties and limitations in attracting FDI to the wood sector, especially issues related to trade fraud and efficient co-operation between domestic and FDI firms.

To realise the $11 billion export target set for the wood sector this year, enterprises should maintain and expand to new markets, focusing on the development of infrastructure for the sector, enhancing the quality of the workforce and applying new technologies, said Deputy Minister of Agriculture and Rural Development Ha Cong Tuan.

The State needed to create favourable conditions for the formation of industrial parks specialising in wood processing, with priority given to the central and northern regions, such as Nghe An Province, and continue to expand existing industrial parks in the south such as HCM City and Dong Nai, Binh Duong and Binh Phuoc provinces, Tuan said.

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