VPA Status: FLEGT Implementing
- Viet Nam began negotiations with the EU in 2010 and signed a VPA in 2018. The agreement entered into force in June 2019.
- The terms of the VPA were enshrined in Viet Nam’s new forestry law which came into force in January 2019. The new law includes a commitment from the government to further increase cooperation in forestry with foreign partners to strengthen environmental protection and help meet sustainable development goals, climate change and other international commitments.
- Viet Nam promulgated Government Decree No. 102 to implement a Timber Legality Assurance System (VNTLAS Decree) in September 2020. The VNTLAS Decree addresses important elements of the VPA related to timber and wood products’ import and export. It also provides the basis for an Organisation Classification System (OCS) (referred to as the Enterprise Classification System (ECS) in the Decree) and addresses the need to establish the country’s FLEGT licensing scheme. However, within the scope of the VNTLAS Decree the OCS/ECS only applies to processing and exporting enterprises, whereas the VPA states that it should apply to all organisations in the supply chain.
- The EU Delegation to Viet Nam said in a press release published in September 2020 that FLEGT-licensing scheme could only become operational “once a fully functioning VNTLAS in line with the VPA has been developed, implemented and jointly assessed as fulfilling all VPA requirements”
- Next steps in the VPA process for 2021 include:
- Establishing the electronic information management system and developing a circular with specific provisions for the enterprise classification system which will come into effect after 18 months;
- Establishing the electronic FLEGT-licensing system linked to the Vietnam National Single Window international trade information and data system;
- Producing technical guidelines and manuals for operation of the VNTLAS and FLEGT.
- The M&E Framework and Action Plan for VPA/FLEGT Communication and public disclosure of information was approved by Joint Implementation Committee (JIC) Co-Chairs and came into effect on 16 April 2021.
- Viet Nam is not only a significant timber producer but also a major regional processing hub, importing wood from over 80 countries, tropical and temperate. VNTLAS will cover both domestically produced wood and imports.
- Vietnamese operators will have to undertake due diligence on imports, assess the risk of illegality and undertake mitigation measures if necessary. There is potential for this to create a legality assurance ripple effect across the wide range of countries supplying Viet Nam.
|Forest area (2020)||14.643 mil. ha|
|Deforestation rate (2010-2020)||+0.1255 mil. ha/year|
|Planted area (2020)||+4.349 mil. ha|
|Tree cover loss (2001-2020)||-3.07 mil. ha (-19 %)|
|Tree cover gain (2001-2012)||+564,000 ha|
|FSC certified area (August 2021)||199,297 ha|
|PEFC certified area (August 2021)||0 ha|
|Double certified area (FSC & PEFC, August 2021)||0 ha|
Source: FAO, Global Forest Watch, FSC, PEFC
- According to the World Resources Institute large areas of Vietnam’s forests were degraded, deforested, or defoliated following the conflicts of the mid-20th century. As a result, Vietnam embarked on a national afforestation program in 1987.
- According to the FAO 2020 Forest Resource Assessment, forest area in Viet Nam increased from 9.4 million hectares in 1990 to 14.64 million hectares in 2020. The plantation area increased from 970,000 hectares to 4.35 million hectares during the same period. The primary forest area is estimated at 80,000 hectares in 2020, a figure stable since 2000.
- Vietnam is currently the only country in the Mekong region to have reported a continuous increase in forest cover over the last three decades. By 2030, the Vietnamese government aims to stabilize the natural forest area to at least equal the area achieved in 2020 and increase the national forest coverage to 45% of land area.
- While forest area is increasing, concerns remain over the overall quality of forests, evident from very low biomass stocks. An estimated 33% of Vietnam´s forests are degraded and of poor quality having been degraded due to over-harvesting, agricultural conversion and the resulting overuse of soils. Only 8% of the forests in Vietnam are still classified as “rich and medium rich natural forests” (UNIQUE, 2017).
- In 2014, the government imposed a logging ban in most natural forest areas, a regulation which was extended nationwide in 2017. Since then all commercial wood supply has been derived from plantations and imports.
- Viet Nam’s plantations consist mainly of fast-growing species including eucalyptus, acacia, pine, together with some rubberwood and native species.
- Supply from plantations is highly fragmented with between 60% and 70% derived from small household producers. Around 80% of plantation supply comprises small diameter wood suitable only for wood chips and MDF.
- As a result, Viet Nam is heavily dependent on imports for wood supply, particularly of larger diameter logs and higher value and decorative species and panel products.
|GDP (2020)||271,158.44 million USD|
|Population (2020)||97.34 million|
|Income group (2020)||Lower middle income|
|Ease of Doing Business (EDB) Rank (2020)||70 / 190|
|Global Competitiveness Index Rank (2020)||67 / 141|
|Liner Shipping Connectivity Index (maximum value in 2004 = 100) (2019)
Source: World Bank, World Economic Forum
Timber Industry Competitiveness
- Viet Nam’s role as a wood processing hub continued to rise during 2020. Viet Nam is increasingly recognised as the primary location in South East Asia for supply of mid-range interior furniture and has become a major competitor to China in this sector.
- In 2020, Viet Nam overtook China to become the leading supplier of these products to the United States
- The on-going trade war in 2018 and 2019 between the US and China has created significant new export market opportunities but is not without risk for Viet Nam.
- The US import tariffs imposed on Chinese wood products increases the competitiveness of Vietnamese wood products in that market and has led to a surge in investment in Viet Nam, particularly by Chinese manufacturers anxious to avoid the tariffs.
- This in turn increased US scrutiny of Viet Nam’s own export promotion regime with claims circulating in 2019 and 2020, for example in the Wall Street Journal and Bloomberg, that some Chinese goods imported into the US were being transhipped through Viet Nam and mis-declared as originating in the country.
- In October 2021, the US government reached an agreement with Vietnam after a Section 301 (US Trade Act) Investigation following these and other allegations of illegal harvesting and trade of illegal timber in Vietnam. Vietnam made a commitment to additional measures to eradicate illegal timber trade, all subject to monitoring by the Office of the U.S. Trade Representative, including to: improve the Timber Legality Assurance System; keep confiscated timber out of supply chain; verify legality of all domestically harvested timber; and work with high-risk source countries to improve forest law enforcement. On written request by the United States, Viet Nam is also committed to providing information related to the inspection, due diligence, and audit performed on any particular shipment of timber or wood products that was imported into Viet Nam.
- Rapid inward investment brings other challenges, including escalating land and labour costs, bottlenecks at ports, and traffic jams on roads implying saturation in some parts of Viet Nam and raising questions on whether the current pace of export growth can be sustained.
- Viet Nam’s performance against various international competitiveness indices has been mixed in recent years. The country’s ranking on the World Economic Forum’s Global Competitiveness (GC) index increased from 70th in 2013 to 60th in 2017 but subsequently dropped again to 70th in 2020. On the GC, Viet Nam (67th) scored lower than Thailand (40th) and Indonesia (50th). On the World Bank’s Ease of Doing Business index in 2020, Viet Nam (70th) ranked slightly higher than Indonesia (73rd) but significantly lower than Malaysia (12th) and Thailand (21st).
- Viet Nam’s Connectivity Index rating (66.5) was unchanged in 2019 and remains significantly lower than China (151.9) and Malaysia (93.8) but is higher than India (55.5), Thailand (52.9) and Indonesia (44.4).
- IMM survey work indicates that the Vietnamese furniture industry is regarded by EU importers as technically more evolved than most other Asian producer countries and increasingly able to supply products to high European quality standards.
- Vietnam’s domestic wood products consumption is valued at around US$2.8 billion per year, equivalent to only US$30 per capita and much lower than the global average of US$72 per capita.
- Domestic consumption is expected to increase, spurred on by rapid urbanisation and recent recovery in Vietnam’s real estate market, but at present the wood industry is still heavily export-oriented.
- Viet Nam’s exports of wood furniture, wood pellets and wood chips, paper, plywood, secondary processed wood products and veneer are rising rapidly. The total export value of timber, timber products and paper increased to almost US$16.2 billion in 2020 from US$8.7 billion in 2015.
- In 2018, it is estimated that Viet Nam was supplied with 34.4 million m3 (roundwood equivalent) of wood products (IMM estimate drawing on Viet Nam government sources and import data compiled by Forest Trends).
- Around 70% of supply derived from domestic plantations, while the remainder comprised imports of logs (7%), sawnwood (15%) and panel products (8%).
- Domestic wood supply constraints have meant that Viet Nam’s imports have continued to rise from a diversifying range of countries.
Total import value of timber and timber products into Vietnam in 2020 was US$3.95 billion, a decrease from US$4.71 billion in 2019. This followed a consistent rise in the value of imports from US$3.84 billion in 2015 to US$4.66 billion in 2018.
In 2020, Viet Nam imported US$2.10 billion of paper products, a 12% decrease from US$2.35 billion in 2019. Paper imports derive primarily from China, South Korea and Japan.
Sawnwood imports amounted to US$796 million in 2020, a 9% decrease from US$865 million in 2019.
The United States is the largest supplier of sawnwood, with Viet Nam’s imports rising to US$242 million in 2019 before declining to US$226 million in 2020. Chile is the second largest supplier, with Viet Nam’s imports amounting to US$68 million in 2020, declining from $79 million in 2019.
Amongst tropical countries, Cameroon supplied US$62 million of sawnwood to Viet Nam in 2020, a 44% decline from US$89 million the year before. Imports of sawnwood from Brazil were US$55 million in 2020, 11% less than the previous year but still around double the volume of only five years before.
Imports of sawnwood from neighboring Laos and Cambodia fell dramatically between 2015 and 2020, respectively from US$249 million to US$55 million and from 369 million to US$7 million.
Sawnwood imports from Russia and China, both negligible only a few years before, were US$42 million and US$35 million respectively in 2020.
In 2020, Viet Nam imported logs to the value of US$397 million, 17% less than the previous year and the lowest value since 2015.
Cameroon was the main trading partner for tropical logs with a value of US$88 million in 2020 (declining 23% from US$108 in 2019). Other significant tropical log partners in 2020 included Republic of Congo (US$40 million); Nigeria (US$19.5 million); Ghana (US$9.3 million); Malaysia (US$3.8 million) and Laos (just US$2.1 million in 2020, down from US$110 million in 2015).
Imports of logs from the United States increased 2% to US$75 million in 2020. In 2020, imports from France (US$47 million) and Germany (US$30 million) were less than the previous year due to the pandemic, but the longer term trend has been upwards. Much of the temperate wood comprises oak and ash for manufacture of interior furniture for re-export from Viet Nam.
Plywood imports in 2020 amounted to US$224 million, a 6% rise compared to 2019.
Plywood imports are dominated by China, with a value of US$204 million in 2020, an increase from US$187 million in 2019. Most other plywood imports are from Indonesia and Russia.
Veneer imports in 2020 amounted to US$205 million, a 16% rise from US$172 million in 2019. China is the main supplier, accounting for US$172 million in 2020.
Viet Nam’s wood products exports have almost doubled since 2015. The total value of exports was US$16.19 billion in 2020, a gain of US$2.2 billion compared with 2019.
USA remains the dominant trade partner with exports amounting to almost US$9.2 billion in 2020 (over 55% of total export value). China is the second largest export market with exports valued at US$1.7 billion (10.9%) in 2020. Exports to Japan amounted to US$1.5 billion (9.7%) in 2020, a steady decline since 2015. Exports to the EU27+UK amounted to US$895 million (5.5%) in 2020. EU27+UK exports have remained fairly constant in value since 2015, though the share has declined from the high point of 12.8% share in 2018.
There was strong growth in exports of wood furniture, paper, plywood, secondary processed wooden products and veneer from 2019 to 2020.
Export value is dominated by furniture, representing almost 66% of the export value in 2020, an increase from 63% in 2019. Wood for energy (pellets) represents 14% of export value, down from 17% in 2019. Paper exports accounted for 10% of the export value in 2020, having grown from 6% in 2015. Plywood exports account for 5% of the total export value, slightly lower than the 6% share of 2019. Veneer, sawnwood and logs account for just over 1% combined of total export value and the share of all three material types has been in long-term decline.
Export value of wooden furniture increased from US$8.74 billion in 2019 to US$10.62 billion in 2020.
The USA market for furniture remains dominant with a value of US$8.1 billion in 2020, almost US$2 billion higher than 2019 and double the value of 2016. Other significant furniture markets include Japan (US$553 million in 2020) and Canada (US$327 million in 2020).
Export value of energy wood (mainly pellets) decreased from US$2.4 billion in 2019 to US$2.3 billion in 2020. Approximately 50% of the value of exports were to China (US$1.1 billion in 2020) followed by Japan (US$716 million) and South Korea (US$339 million).
Paper exports have trebled since 2015, amounting to US$1.6 billion in 2020. The main markets in 2020 were USA (US$436 million) and China ($376 million).
Plywood exports have doubled since 2017, with exports valued at US$866 million in 2020. The two key markets are USA (US$423 million in 2020) and Republic of Korea (US$208 million in 2020). Export value to the USA increased from just US$26 million in 2015.
Secondary processed wood products had an export value of US$592 million in 2020, an increase from US$514 million in 2019. The two key markets are USA (US$192 million in 2020) and Japan (US$136 million in 2020). Export value to the USA has risen from US$75 million in 2015 and US$111 million in 2019.
Export value of veneer increased 19% to US$98 million in 2020 from US$79 million in 2019. China is the dominant export market with exports valued at US$83 million in 2020.
Sawnwood exports amounted to US$95 million in 2020, down from a peak of US$226 million in 2017. The main export partners in 2020 were China (US$40 million) and Republic of Korea (US$33 million).
Log exports have declined since 2015. Log exports amounted to US$12 million in 2020. Over 90% of exports were to China in 2020.
EU+UK Imports from Viet Nam
The value of EU27+UK wood products imports from Viet Nam in 2020 declined to US$895 million after rising to US$1 billion in 2019.
EU27+UK imports from Vietnam in 2020 were dominated by wooden furniture (US$752 million) though this was down 15% compared to 2019 (US$867 million).
EU27+UK imports of Secondary processed wood products from Viet Nam increased 5% to US$102 million in 2020, up from US$98 million. The value of secondary processed wood products has increased every year since 2015.
- Viet Nam is one of the few tropical countries to supply paper products to the EU. Although EU imports from Viet Nam stood at US$29 million in 2020, this value is negligible in a sector with EU consumption of around 80 million tonnes per annum, and total imports from outside the EU of 7.4 million tonnes.
- The UK is the leading market for timber products from Viet Nam in the EU27+UK region, with import value of US$293 million in 2020, a 34% decline compared to the previous year. Other large markets are: France, US$147 million in 2020, 6% less than in 2019; Germany, US$139 million in 2020, 4% more than in 2019; and the Netherlands, US$76 million in 2020, a fall of 12% compared to the previous year.
EU+UK imports from Viet Nam by product group
(data source: Eurostat COMEXT)
EU+UK imports from Viet Nam by destination
(data source: Eurostat COMEXT)
Data Sources and Issues
- The statistics shown in this IMM report draw on UN COMTRADE supplemented with trade data from major timber trading partners in the EU, Asia and America from Eurostat COMEXT and national statistics from Business Trade Statistics Ltd. The data is also made available at www.stix.global and www.immstats.org.
- Where necessary, the commentary in this report draws on additional secondary sources, notably the annual analysis of Viet Nam timber trade by Forest Trends supported by various agencies.