After more than two years of initiation, on July 25, 2022, the US Department of Commerce (DOC) announced the preliminary conclusion of investigation into evasion of trade remedies against hardwood plywood imported from Vietnam. Most recently, on March 23, 2023, the DOC announced a sixth extension of the time to issue the final conclusion of the case on May 2, 2023. The judgement and the delay of the DOC's investigation conclusion have caused many difficulties for plywood manufacturers and the Vietnamese wood industry. Govina Investment Joint Stock Company is no exception. While rationalizing production scale, looking for new customers to reduce inventories and increasing financial turnover, Govina is straining together with other Vietnamese wood firms to overcome difficulties and urgently needs the companionship of authorities at all levels, customers and people.
Govina General Director Vu Khanh Cuong said, in 2017, in response to the investment policy of Bac Kan province, Govina Investment Joint Stock Company built a wood processing factory in Thanh Binh Industrial Park with a yearly capacity of 120,000 cubic meters, which cost VND160 billion of investment capital in the first phase. In May 2018, the factory went into operation, manufactured environmentally friendly high-quality interior plywood products, which were exported to the United States, South Korea, Malaysia, and Japan. Since then, Govina has operated stably, actively contributed to the Stated budget, provided stable jobs for hundreds of local workers and fulfilled all salary, bonus and insurance policies for employees.
Powered by modern technologies, wood processing stages are semi-automated, from inputting to product finishing, to use up entire trunks, branches and roots for wood processing. Excess parts such as sawdust and wood bark are used as fuel to generate energy to reduce cost and not pollute the environment. Therefore, the company's products always meet international quality standards and are competitive in fastidious markets.
The factory in Bac Kan province has favorable access to a vast material supply source, abundant local labor resources and close care and support of local authorities during its operation. However, Govina also faces difficulties due to incomplete industrial park infrastructure and professional labor shortages. In addition, the company does not have its own material area and it has to depend on supplies from local people. In the past five years, Govina has sided with local farmers and the local economy but recently complicated market fluctuations, especially the initiation of an investigation by the DOC, hurt its business activities.
He added, Vietnam's wood exports to major markets, especially the US, have declined sharply for over one year, causing the company to moderate production and handle inventories amid a sharp fall in cash flows. To maintain its operations, Govina has tried to find new markets. Nonetheless, the company has to cut working hours and lay off workers for the time being because it is difficult to find output markets due to small order sizes or low selling prices.
According to the conclusion on July 25, 2022, DOC said that plywood from Vietnam, if it had a core using raw materials imported from China, will be subject to anti-dumping and anti-subsidy duties while it will be free from these duties if its core is made from raw materials as peeled boards manufactured in Vietnam (or in other countries), he added. The DOC allows Vietnamese exporters and US importers to participate in self-certification to exclude them from evasion investigation. The company has completed legal documents to evidence that the origin of input materials for production is Vietnam's timber (from planted forests in Bac Kan province) to competent authorities. However, after one year to date, there has been no decision from the US side. The market is still not open, giving rise to stockpiled inventories worth over VND100 billion. The company's leadership has made efforts to find domestic partners, the prices are discounted by 30% but sales are small. Govina is struggling to find ways to maintain its operations and waiting, day by day, hour by hour, for the final ruling from the DOC. But with the announcement of the DOC and with the current situation, the export market is likely unable to recover until June 2023 at the earliest.
In the face of current difficulties, many businesses have proposed and all expected banks to keep credit levels and, at the same time, reschedule loan repayment terms to assist woodwork companies to maintain production and business. Besides, local authorities at all levels consider extending land rents; postponing fee collections (for example, no interest on late payment) to assist companies to recover production in the coming time.
Ngo Khuyen (Vietnam Business Forum)
Vietnamese
October 2024
Hanoi