Forest Trends Information Brief
Information Brief No 5 December 2012
• Lao‐Viet timber trading: Current situation and measures • • trades for sustainable timber • •
This article summarizes results of a workshop on the Lao‐Viet timber trade held in December 2012 and hosted by the Quang Tri Peoples’ Committee, the Vietnam Timber and Forest Products Association (VIFORES) and Forest Trends.
The Lao – Vietnam Timber Trade Laos has become one of the five largest suppliers of timber to Vietnam. The total value of timber imported to Vietnam from Laos reached US$313.65 million in 2011, accounting for 23% of total Vietnam’s timber import value (at around US$1 billion). In 2009, Laos accounted for only 10.6% of the Vietnam’s total timber import by value. Lao timber has become an important source for Vietnam’s burgeoning wood processing industry. In recent years, several environmental organizations have accused the Vietnamese timber processing industry of using illegally sourced Lao timber, therefore contributing to forest loss in Laos. Currently, Vietnam is negotiating a Forest Law Enforcement, Governance and Trade (FLEGT) Voluntary Partnership Agreement (VPA) with the European Commission. Laos will start the a VPA negotiation with the EC in mid 2013. One of the critical objectives of the VPAs are to ensure the legality of the timber exported to the EU, which will help both Vietnam and Laos wood products comply with the new EU Timber Regulation. Both countries aim to develop a Timber Legality Assurance System (TLAS) which would affect all points of the trade flows of timber from Laos, Vietnam through to the EU. The Lao Bao Border gate, located in Vietnam’s Quang Tri province, is one of the most important border gates for the Lao‐Viet timber trade. Annually, 100,000 ‐ 200,000 m3 of timber pass from Laos to Vietnam through this gate. Approximately 150 timber trading companies are involved in this trade. Currently, the Quang Tri Peoples’ Committee has good political and economic relations with several neighbouring Lao provinces, presenting an interesting potential important opportunity for the two countries to discuss mechanisms to monitor and control for the trade of legally sourced timber across the border and ultimately contribute to the design and implementation of VPAs in both countries.
December 2012 Workshop Quang Tri People’s Committee, the Vietnam Timber and Forest Products Association (VIFORES) and Forest Trends hosted the workshop The Lao‐Viet Timber Trade: Current Situation and Measures for Sustainable Timber Trade in Quang Tri on December 7th, 2012. The major objective of this workshop was to discuss governance issues surround the timber trade between Quang Tri and neighbouring Lao provinces.
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Lao‐Viet timber trades
More specifically, the workshop aimed to help participants: •
Understand the timber trade trends between Laos and Vietnam via the Lao Bao and Bo Y borders, as well as emerging legality requirements of the global timber market; • Identify policy options for the mitigation of potential negative impacts of illegal timber trading, or the curtailing of illegal timber trade, on local livelihoods and environment; and • Understand how to constructively inform the emerging VPA negotiations processes in Laos and Vietnam. • Inform the proposal to include the Siamese Rosewood into Appendix 2 of CITES Participants included representatives from the Quang Tri People’s Committee, Customs Department, Forest Protection Department, timber trade associations (VIFORES, Binh Dinh FPA, Dong Ky Association, HAWA), Vietnam Administration of Forests (Ministry of Agriculture and Rural Development), Import‐Export Department (Ministry of Industry and Trade), international organizations, timber processors and trading companies in Quang Tri.
Lao Bao and Bo Y border timber trade Vietnam and Lao share 7 border gates, in which Lao Bao and Bo Y are the most important in terms of trade volume and turnovers. In 20121, 120,000 m3 RWE of timber passed through Lao Bao, valued at US$130 million. 94,000 m3 RWE passed through Bo Y, valued at US$40 million. The value of timber traded through Lao Bao is considerably higher than that of Bo Y. Figure 1 shows a few years’ worth of historical data. In both border gates, the import turnovers were considerably high in 2011 compared to that of 2010. Nevertheless, it trends to decrease after 2011 (Figure 1). The major reason is that, according to Y Anh trading company, the price of precious timbers exported to China decreased since last year. However, the imported values are still higher than 2010, 50% in Lao Bao and 18% in Bo Y. From Quang Tri, the imported timber was sold to wood villages2 (30%), exported directly to China (60%) or sold onward to timber processors (10%). The processors in Quang Tri are now gradually changing to use the timber harvested from Vietnam’s own production forests. Imported timbers now account for only 25% of raw materials used (Phuong Thao Ltd. Company)
Figure 1: Import turnover index (value in 2010 = 100)
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Data was only collected through November 2012 Vietnamese villages where wood processing dominates the village economy, with many small and medium-sized enterprises – many of them at the household level. 2
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Lao‐Viet timber trades
Wood Villages Use of Imported and Domestic Materials
The Dong Ky Timber Association participated in the workshop as a representative the 300 companies and 2,500 household‐based processors working in Dong Ky and employing 13,000 laborers. On average, Dong Ky consumed 34,000 m3 RWE, mainly Lao, Cambodian and Thai imports. However, the Dong Ky manufacturers have started shifting to domestic source timber from production forests as precious hardwoods from natural forests have declined. using the timber from production forest because the supplies of precious timbers from natural forests gradually reduced.
Box 1. Some discussions from the participants “Since Lao start negotiation with EU regarding FLEGT/VPA, the imported volume of timber from Lao will be affected. The opinions that who does not export timber products to EU will not be interested in FLEGT/VPA thereby is not completely right. Should Vietnamese companies be prepared to meet the new regulations as well as international trade agreements?” “Vietnamese companies/enterprises really want government involved into the FLEGT/VPA however we should initially assess who will be mostly impacted and how to mitigate the uncertainty after agreement being signed”
Conclusions
This Information Bulletin was written by Quang Viet Dang and Phuc Xuan To in Forest Trends. The Information Bulletin Series is edited by Kerstin Canby and is supported by UKAID and NORAD. Other issues can be found at www.forest‐ trends.org
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The trading values of timbers through Bo Y and Lao Bao decrease in 2012 compared to 2011, however still higher than 2010. If Chinese traders do not import the timbers from these border gates, it might continue to decrease in the future.
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If Vietnam in collaboration with Thai Land proposes to include the Siamese Rosewood into Appendix 2 of CITES, the Vietnamese authorities should inform to the timber trading companies before the proposal is submitted so that the companies/enterprises will have solutions to avoid the risks from investments in Lao.
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Since the processors in Quang Tri and the small producers in Dong Ky change their behaviors to use the raw materials from production forests, TLAS as well as VPA should be developed under the consultations from not only civil organizations but also the companies/enterprises to mitigate the uncertainty before it being signed.