Classification of wood processing and exporting enterprises - Part 2: Need for a suitable roadmap

Classification of wood processing and exporting enterprises needs to have a roadmap suitable for each market, type, size of enterprise and product.

Mr. Trinh Xuan Duong - Chairman of the Vietnam Plywood Association (Vietnam Timber and Forest Products Association) - had an interview with reporters of the Industry and Trade Newspaper about this issue.

Sir, regarding the regulations on classifying wood processing and exporting enterprises, currently, many enterprises are complaining about difficulties. What about the plywood industry?

Currently, no enterprise in the Vietnam Plywood Association has registered for this enterprise classification. One enterprise has submitted its application but has not fully met the requirements. Meeting the requirements for classifying enterprises in Group I and Group II, enterprises in the plywood industry are currently facing many difficulties.

Tropical hardwood plywood. Photo: Vietnam Timber and Forest Products Association

The reason is that most plywood enterprises are developing craft villages, so it is very difficult for them to immediately meet many high standards such as fire prevention, fire fighting, labor, occupational safety and hygiene, insurance, etc.; or enterprises that purely export to markets such as Korea, Malaysia, Japan, etc. These markets have fewer requirements (ie they do not need to meet the classification of Group 1 and Group 2 enterprises), so they are not prepared.

For businesses that have already obtained the Sustainable Forest Certification (FSC) or BSCI certification (export standards to the EU market), classifying businesses into Group I and Group II will be easier. However, currently, the authorities require all wood processing and exporting businesses to participate in this classification.

Classifying and evaluating businesses will help businesses clear customs faster than evaluating each container. Classifying businesses also evaluates the reputation of the business because good or bad products depend on the business, not the product.

This is a requirement of the state agency when businesses participate in the wood processing and exporting market. However, some markets require it, some do not. For example, in the plywood industry, almost the majority of exports are to markets that do not require it, except for businesses exporting to the EU and US markets.

On the other hand, in the wood processing industry, the products are very diverse, for example, there are units that only produce and export wooden rosaries, or wooden lathes, wooden board patterns, chess pieces, etc. These are very small products, but serve a market segment such as Singapore, Malaysia, Korea, so it is not necessary to participate in the enterprise classification. This is a difficulty when the policy is applied to all enterprises related to wood processing and wood export.

The introduction of regulations applicable to all businesses in the wood processing and exporting industry leads to difficulties for small businesses and businesses exporting to markets that do not require this type of business classification.

So, will small businesses be "blocked" from exporting, sir?

That’s right. As I shared above, even in the plywood industry, there are many very small businesses. Most plywood businesses are small craft villages, so it is very difficult for them to immediately meet many high standards such as fire prevention, labor, occupational safety and hygiene, insurance, etc.

Of course, in the long run, businesses will have to respond, have to transform to meet market demands, but they need a process. Maybe, the roadmap is 1 year or 2-3 years. Normally, for small businesses, they need a minimum of at least 1-2 years to do it.

Mr. Trinh Xuan Duong, Chairman of Vietnam Plywood Association

In the plywood industry alone, how many potential businesses are there that can meet the requirements for this business classification? Given this difficulty, what recommendations does the business community have, sir?

The potential is about 30% that can be met. Because in the plywood industry, some businesses are also gradually moving to the provinces, applying for licenses to expand factory investment, this initial investment period will probably take at least about 2 years.

Therefore, I think that the circular guiding the classification of enterprises and the competent authorities need to extend the time (instead of taking effect from November 15, 2024). Even the application of the EUDR regulation, the EC had to postpone for 1 year because no enterprise could apply it. This is an issue that we need to look at in terms of policy, when business policies cannot be implemented.

On the other hand, the regulation applies to all enterprises in the wood processing and exporting industry. This industry currently does not have a data infrastructure, and hand-submitting documents, with more than 1,600 enterprises, each enterprise submits boxes of documents, can the forest rangers do it? Enterprises are also concerned that in the process, negativity and sensory evaluation will arise.

Therefore, businesses also recommend that there should be a roadmap to classify businesses according to each market; each business size (an enterprise exporting 1 billion VND in revenue is different from an enterprise exporting 100 billion VND in revenue); wood processing, it must be the type of wood processed, not lumping all into one.

Thank you!

Faced with difficulties and obstacles of enterprises related to the classification of enterprises according to Circular 21 when Decree 120 takes effect, recently, the Vietnam Timber and Forest Products Association sent an official dispatch to the Forest Protection Department (Ministry of Agriculture and Rural Development). The dispatch stated: “Up to now, enterprises do not have sufficient information to participate in the classification of export enterprises according to the provisions of Decree 102 and Decree 120 (amending Decree 102). If in the near future there is a decision on the implementation time for the management of exported timber as prescribed in Section 2, Chapter II of Decree 102, enterprises will face many difficulties.”

Responding to this issue, the Forestry Department (Ministry of Agriculture and Rural Development) said that regarding enterprise classification, regulations on classification of wood processing and exporting enterprises are guided in detail in Circular No. 21/2021/TT-BNNPTNT dated December 29, 2021 of the Minister of Agriculture and Rural Development regulating the classification of wood processing and exporting enterprises (hereinafter referred to as Circular No. 21/2021/TT-BNNPTNT), effective from May 1, 2022.

Currently, nationwide, 16 provinces have implemented classification with 194 wood processing and exporting enterprises classified as Group I enterprises. Information on Group I enterprises is compiled by the Forestry Department and publicly posted on the electronic information page: www.kiemlam.org.vn.

In Clause 2, Article 5 of Decree No. 120/2024/ND-CP dated September 30, 2024 of the Government amending and supplementing a number of articles of Decree No. 102/2020/ND-CP (hereinafter referred to as Decree No. 120/2024/ND-CP), it is stipulated: “2. The provisions on enterprise classification for entities other than wood processing and exporting enterprises in this Decree shall take effect after 18 months from the effective date of this Decree”.

Accordingly, the expanded business entities in Decree No. 120/2024/ND-CP will take effect from March 16, 2026. Currently, the Forestry Department has proposed that the Ministry of Agriculture and Rural Development develop a Circular amending and supplementing Circular No. 21/2021/TT-BNNPTNT to guide the classification of enterprises in accordance with the entities prescribed in Decree No. 120/2024/ND-CP.

Source: https://congthuong.vn/phan-loai-doanh-nghiep-che-bien-va-xuat-khau-go-bai-2-can-co-lo-trinh-phu-hop-356543.html