In 2023, wood chip export output will reach nearly 16 million tons

Mr. Thang Van Thong - Deputy Head of Vietnam Wood Chip Association - Deputy General Director of Hao Hung Group had an interview with reporters of Industry and Trade Newspaper about this issue.

Up to this point, how much value added tax (VAT) has the local tax sector refunded to businesses in the wood industry in general and the wood chip industry in particular, sir?

The tax refund story has been going on for many months and wood industry enterprises have sent many documents to the Government, the Prime Minister and relevant agencies to propose solutions to difficulties in VAT refund issues for enterprises.

In 2023, wood chip export output is expected to reach nearly 16 million tons.

Following the direction of the Prime Minister, on August 9, the General Department of Taxation ( Ministry of Finance ) issued Official Dispatch No. 07/CD-TCT to the heads of local tax departments to promote the settlement of value added tax refund dossiers.

On September 21, 2023, the General Department of Taxation continued to send a document to local tax departments, requesting consideration of the proposal of the Vietnam Timber and Forest Products Association and the Vietnam Wood Chip Association on reducing VAT to 0%.

Implementing those documents, tax departments in provinces and cities have promptly supported businesses in the tax refund process. Up to this point, many localities, especially the Central provinces such as: Ninh Thuan, Phu Yen, Binh Dinh, Quang Ngai, Quang Nam , Thua Thien - Hue, Quang Binh, Thanh Hoa... have quickly refunded taxes to businesses.

According to a preliminary summary of the branches and a number of enterprises, as of early September 2023, wood industry enterprises, mainly in the field of wood chip and pellet processing, have been refunded over VND 2,000 billion out of a total of more than VND 6,000 billion in tax pending refund.

Although the refunded figure is only about one-third of the total VAT amount that needs to be refunded to businesses, this will set a precedent for other localities to promote tax refunds.

We appreciate the close attention and direction from the Government, the Ministry of Finance, the General Department of Taxation, and the drastic participation of tax departments in provinces and cities in VAT refunds for wood industry enterprises.

It can be seen that the intervention of the Government, the Prime Minister, ministries and branches has helped many wood industry enterprises to have timely capital to re-produce to serve orders during the peak season at the end of the year. Thereby, contributing to the revival of many enterprises, helping enterprises to restore production, promoting the export turnover of the wood industry to achieve the set target.

Besides tax refunds, what are the market developments for the wood chip industry, sir?

Regarding the market, in September 2023, the market slowed down a bit. However, it is normal for the market to fluctuate. The export price of wood chips is currently around 140 USD/ton, lower than the same period last year. However, with this price, if we export regularly, forest growers will still have income, producers will still have profits, and exporters will still be effective.

Mr. Thang Van Thong - Deputy General Director of Hao Hung Group

As for the sudden price increase like last year (at times up to 180 - 190 USD/ton), this is an unsustainable price, if import partners do not make profit, they will not buy our products.

Recently, we have worked with Chinese partners and offered the price of wood chips at about 140 - 145 USD/ton. If the partner agrees, we commit to signing a long-term contract. The partner is also considering. This price, as I said above, is suitable and beneficial for all parties.

As for forest growers, previously, the selling price of firewood was around 900,000 VND to 1,000,000 VND/ton, but now, with the export price of wood chips from 140 - 145 USD/ton, forest growers will be able to sell firewood at a price of 1,200,000 VND/ton or more.

In addition, the change in varieties and planting technology will help increase the productivity of forest growers. Previously, the productivity was only 80 tons/ha, but now it has increased to 120 - 160 tons/ha. The output increases, the price increases, and forest growers have higher profits. Farmers only need to plant 1 - 2 cycles of acacia trees to get more profit than growing agricultural crops.

Previously, 1 hectare of acacia cost only 40-50 million VND, but now it costs about 80-90 million VND/hectare. A family with a few hectares can harvest from several hundred million VND in a few years. Acacia trees only require care in the first 6 months. After that, the forest planter can go to work to earn income. People have this savings without much effort.

So how will the wood chip export situation be at the end of the year, sir?

The wood industry market this year in general is much worse. Wood chips are somewhat worse; pellets are also worse; plywood market is almost "broken"; the export market for interior and exterior wooden furniture only reaches about 40%.

As for the wood chip industry, from now until the end of the year, wood chip exports will remain the same. The reason is the devaluation of the Chinese Yuan, which means that imported goods for sale in the domestic Chinese market will have to reduce prices.

The world market is still unstable. Wood chips are an input material for the paper industry, although this industry still uses them, the price will be affected.

With the fluctuating market prices this year, the current wood chip price of 140 USD/ton is the best price.

Has there been any change in the market structure of wood chips, sir?

In Southeast Asia, the paper and pulp market only includes Japan, Korea, and China. Of which, the Chinese market accounts for 68-70%; the Korean market accounts for about 3-5%; and the rest is the Japanese market.

The market structure has not changed much. China has just built two more pulp mills (one in Fujian and one in Guangxi) with a capacity of 2 million tons/year/mill. The factory in Guangxi is running at full capacity. The one in Fujian is running at about 800,000 tons/year. It is expected that next year, this factory will run at full capacity.

It can be said that the demand for pulp in the Chinese market will grow further. This is also the market that imports the most wood chips. Most of the pulp and paper factories are concentrated in the Chinese market.

Due to the advantage of short transportation distance and cheaper price compared to other countries, Vietnam is still the world's number one supplier of wood chips to the Chinese market.

Regarding the forecast of wood chip export output this year, in my opinion it will not decrease compared to last year (15.81 million tons) but the value will decrease due to the decrease in export chip prices.

Thank you!

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