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Furniture villages face bankruptcy due to FLEGT VPA
Thuy Dung
Friday,  Jul 11, 2014,09:54 (GMT+7)

Furniture villages face bankruptcy due to FLEGT VPA

Thuy Dung

By Thuy Dung - The Saigon Times Online

HANOI – Many craft villages making wooden furniture in Vietnam will face bankruptcy due to stringent requirements relating to timber origins of the European Union (EU) as the major furniture importer.

Nguyen Ton Quyen, general secretary of the Vietnam Timber and Forest Products Association, predicted a large number of petty wood firms will be on the edge of bankruptcy if they fail to adapt themselves to the new rules.

In a seminar to promote domestic wood products on Wednesday, Quyen informed Vietnam and the EU have been in talks over Forest Law Enforcement, Governance and Trade (FLEGT) and Voluntary Partnership Agreement (VPA) since 2010, and the agreement is to be concluded this year.

According to the draft agreement, wood makers have to prove the legal origins of their products. However, many small-scale enterprises in Vietnamese craft villages mainly do business without caring about the origins of timber. As a result, the production is considered illegal and cannot be shipped to the EU, or even remained unsold in domestic market.

Besides, despite the diversification of products, the production at craft villages has no trade names and contracts. It is made and sold in the free market only.

Many woodworking enterprises explained that they only make products for domestic consumption, so there is no need to care about the new rules of FLEGT VPA.

In the first half of this year, Vietnam imported US$1.1 billion worth of timber out of the plan to import US$1.4 billion worth for the whole year.

Quyen asserted that, sooner or later, Vietnam’s regulations of wood origin management will be made compatible with the rules on FLEGT VPA. At that time, all domestic products will have to be traceable in terms of origin.

In his opinion, the Government needs to clarify this for wood firms before it is too late.

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