Wood industry facing losses due to COVID-19
The wood industry was facing a ‘disaster’ with many businesses left without orders from now until 2021 due to the COVID-19 pandemic, said the Vietnam Timber and Forest Product Association (VTFPA).
VTFPA said that the US, EU, Japan, South Korea and China accounted for over 90 per cent of the country’s wood export market, and had all been strongly affected by COVID-19.
“Many Vietnamese wood processing enterprises have had orders cancelled of suspended,” said the association.
Since March, 80 per cent of exporters to the US and EU markets had received cancellations or delays until the situation improves. Orders from Japan, South Korea and China similarly dropped by 60-80 per cent.
“For the remaining orders and small orders, businesses are having difficulties as input prices have gone up by US$10-20 per cu.m, and freight costs have increased $500-1,000 per container,” the statement said.
General Director of Lam Viet Joint Stock Company Nguyen Liem said the basic principle of the economy was that supply was always equal to demand. However, the current demand was only for medicine and food, forcing many furniture stores to close in the EU and US – leading to the cancellation and suspension of orders.
“It’s predicted these difficulties will last for the next three-six months or even longer. Many businesses are focusing on minimising costs, including imports of raw materials and other factory expenses,” Liem said.
He said his company had to stop production on March 27.
“Currently, we have 150 containers of finished goods that we cannot ship. We will have to store them in warehouses. The damage is countless,” Liem said.
"Lam Viet's own losses in this coronavirus outbreak amounted to VND200 billion ($8.5 million), not to mention laying off 1,400 workers," he added.
According to Nguyen Phuong, director of Minh Thanh Co., Ltd, cancellations had been poring in over the last two weeks.
“To date, the number of cancelled orders is valued at about $3 million and the number of suspended orders would have been worth $2 million,” Phuong said.
He said his company’s export value to the US market was about $2.5 million prior the COVID-19 outbreak. After receiving cancellations or delays, the company had suspended production. "This means that about 800 workers are now unemployed."
VTFPA said Lam Viet and Minh Thanh were among the many wood processing and exporting firms suffering the damage of the COVID-19 pandemic.
Do Xuan Lap, chairman of VTFPA, said the wood processing industry, one of the country's three main export industries, was facing the reality that most enterprises would have to stop production this month and lay off workers without strong support from the Government.
In order to minimise these losses, VTFPA have asked the Government to include the wood processing industry on the list of products the Government says can extend tax payments and land rents.
VTFPA also said the Government should consider value added tax refunds for eligible exporters, and the exemption of export taxes.