Timber origin becomes a competitive advantage

Production capacity and cost advantages are gradually no longer sufficient to maintain competitiveness, as major markets are shifting their focus from product-level inspection to monitoring the entire journey of raw materials, from the forest to the final product.

In this context, the ability to prove the legal and transparent origin of timber is becoming a new competitive advantage for Viet Nam’s wood industry.

Nguyen Van Dien, VNFOREST Deputy Director General delivers the opening remarks at the workshop. Photo: Bao Thang.

Vietnam currently has nearly 15 million hectares of forest, with a forest cover rate of over 42%. The country is home to around 5,000 wood-processing enterprises, and its products are now present in nearly 170 countries and territories. Vietnam accounts for approximately 7% of the global market share in wood product imports, worth around US$230 billion, indicating significant room for further growth.

However, to fully tap into this potential, the key challenge is no longer primarily about expanding production capacity, but rather about meeting increasingly stringent requirements on legality, traceability, and sustainable development.

This shift is occurring simultaneously across major markets. EUDR requires companies to prove that products are not linked to deforestation after December 31, 2020, and to provide GPS coordinates down to each forest plot.

The United States continues to enforce the Lacey Act along with requirements under Section 301 agreements to control illegal timber. Japan, South Korea, and Australia have also introduced their own regulations to verify the legal origin of timber, while the EU Carbon Border Adjustment Mechanism (CBAM) is expected to gradually expand into the forestry sector in the coming years.

At the workshop “Sustainable Forestry and Development of the ASEAN Wood and Furniture Industry” held on June 26, Phung Quoc Man, Chairman of the Handicraft and Wood Industry Association of Ho Chi Minh City (HAWA), stated that sustainable development is no longer an option but an essential condition for ASEAN enterprises to participate in global supply chains.

These new requirements go beyond quality and cost competitiveness, increasingly emphasizing the legality of timber sources, traceability, forest certification, and environmental and social responsibility throughout the entire supply chain.

Mr. Phung Quoc Man, Chairman of the Handicraft and Wood Industry Association of Ho Chi Minh City (HAWA). Photo: Bao Thang.

In practice, buyers are increasingly prioritizing proof over pledges. According to Dr. Vu Tan Phuong, Director of the Office of Forest Certification (VFCO), 85% of consumers say climate change has influenced their purchasing decisions, while 46% actively prefer sustainable products.

Meanwhile, although many enterprises declare commitments to sustainability, what buyers and regulators actually require is independently verifiable information on raw material origins. As a result, traceability systems and chain-of-custody certification are becoming essential tools for building trust in the market.

It is no coincidence that traceability has been placed at the center of the agenda. Vietnam is currently highly dependent on a number of key export markets. Dr. To Xuan Phuc, a senior expert at Forest Trends, noted that the United States alone accounted for more than 53% of Vietnam’s wood and wood product export value in the first five months of 2026, followed by China, Japan, the EU, and South Korea. Even a small regulatory change in any of these markets could directly affect billions of dollars in export turnover.

Therefore, proving the legality of raw material sources is no longer a requirement of individual markets, but a general condition for maintaining competitiveness.

“The legality of raw material sources is not only a legal requirement but also a matter of survival in maintaining international market trust,” emphasized Nguyen Van Dien, Deputy Director General of the VNFOREST. He added that Vietnam is currently promoting the development of a fully digitalized traceability system across the entire value chain from forest harvesting to finished products. This is a pathway to enhance value addition and the global competitiveness of the wood industry.

On this basis, the Department has proposed that ASEAN countries develop and share a common database on timber origin to establish a more transparent and reliable regional supply base.

However, there remains a significant gap between market requirements and actual capacity. Vietnam currently has nearly 15 million hectares of forest, but only about 868,000 hectares have been certified under sustainable forest management systems such as FSC or VFCS-PEFC. Among 920 organizational forest owners, only 446 have completed sustainable forest management plans. In particular, enterprises and economic organizations account for just 34.5%, the lowest among the three groups of forest owners.

One of the key constraints is the high cost of developing management plans and obtaining certification, which ranges from VND 50 million to VND 200 million per plan beyond the financial capacity of many small forest owners.

Another bottleneck lies in the traceability system. To date, Vietnam has only piloted forest plantation coding over approximately 25,500 hectares in five northern provinces, a very small figure compared to nearly 4.9 million hectares of planted forests nationwide. While the EUDR requires traceability down to each forest plot using GPS coordinates, many small forest owners still lack equipment and digital skills, and forest data remains fragmented across multiple agencies, not yet connected or queryable in real time.

“The traceability requirement not only affects exports to the European Union but also impacts the entire timber trade chain within ASEAN,” said Dr. To Xuan Phuc, highlighting the issue.

Vietnam has implemented the VPA/FLEGT Agreement, is preparing to comply with the EUDR, and is also applying requirements under the Illegal Timber Agreement with the U.S. This means that even imported raw materials from ASEAN must meet traceability requirements if they are used to produce export goods for high-standard markets. This creates both pressure and opportunity for regional countries to develop a more synchronized and transparent traceability system.

To bridge this gap, the VNFOREST aims to achieve 1 million hectares of forests under sustainable management certification by 2030, ensure that 100% of forests owned by organizations are sustainably managed, and develop an integrated Timber Information System (TTIS) featuring plantation codes, electronic timber logs, corporate databases, and FLEGT licensing.

In addition, the plan includes expanding plantation coding to 15-20 key provinces, providing GPS equipment, training commune-level forest rangers and small forest owners, and studying the establishment of a forest certification support fund to reduce costs for households and producer groups.