world news - 28.03.2008
Vietnamese woodworkers face high material costs
High material costs,
skyrocketing bank interest rates and the falling US dollar have strongly
affected local wood producers and exporters, said Le Quy Hong, chairman of the
provincial Forest Products Processing Association. The Dong Nai Export
Processing Joint Stock Company (Depco) is one among hundreds of wood exporters
in the province which have been affected by inflation. Recently, all of the
company’s production lines were working as usual, but the management board
must now find a way to fight against the recent price hikes. "Since the middle of
the fourth quarter last year, wood exports have faced challenges due to high
input costs," said Nguyen Minh Tam, deputy director of Depco. He also said that in 2008,
as petrol prices continued to increase, other costs would go up. Depco’s key product is
furniture for export to the European market. Last year, the company earned US$2
million from exports. This number, however, may not be reached this year. To produce an export
product, the company needs many other materials, such as paint and packing.
Unfortunately, the price of these materials has increased as well. Last year, 1kg of plastic
packing cost VND23,000. Now, the price has risen to VND30,000. Prices for paint
and wrapping paper have also increased by 30 and 50 per cent, respectively. Transportation and labour
costs are up by between 10 and 40 per cent. After the increase of all the income
costs, Depco has had to increase the price of their products by 20 per cent. But high prices are not
the only thing challenging wood exporters. The falling US dollar has marked
another hurdle, as it has reduced their profits by 3 per cent. "We could have
profits at this moment; however, we cannot stop producing", Tam said. The company has asked
their customers to change their prices, but not all of them have agreed with
this. Confronting this
challenge, the company has pointed out some short-term measures, such as cutting
down unnecessary costs and saving on materials. "Now, the main goal
is to stay in the market. Many wood producers in the province may close
production if electricity costs increase," Hong said. Recently, more than 160
enterprises and companies processing and trading wood have been set up in the
province. One third of them are exporters. Wood products in Dong Nai are mostly
exported to the EU, the US and Japan. In 2000, the provincial
wood export turnover was $20 million. This number increased to $60 million in
2006. Recently, the association
has been co-operating with some banks to help local companies financially. This
is one of the measures to help companies overcome this difficult time.
Wood
exporters in the southern province of Dong Nai have met with many difficulties,
as input costs are increasing and output has been affected by the ailing US
dollar.
See also:
- — Western Canadian Pine Beetle Infestation Spreads
- — Swedish forest policy calls for increased forest growth
- — Forest education builds bridges in Balkans
- — Illegal cuttings and the world market of wood
- — EU urges Russia to reconsider rise in export duties on timber
