Wood exporters in the southern province of Dong Nai have met with many difficulties, as input costs are increasing and output has been affected by the ailing US dollar.
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| Workers at the Dong Nai-based Scansia Pacific Co check wood products before varnishing. Provincial wood exporters are facing mounting input costs and lower export values due to the ailing dollar. |
Wood exporters in the southern
High material costs, skyrocketing bank interest rates and the falling US dollar have strongly affected local wood producers and exporters, said Le Quy Hong, chairman of the provincial Forest Products Processing Association.
The Dong Nai Export Processing Joint Stock Company (Depco) is one among hundreds of wood exporters in the province which have been affected by inflation.
Recently, all of the company’s production lines were working as usual, but the management board must now find a way to fight against the recent price hikes.
"Since the middle of the fourth quarter last year, wood exports have faced challenges due to high input costs," said Nguyen Minh Tam, deputy director of Depco.
He also said that in 2008, as petrol prices continued to increase, other costs would go up.
Depco’s key product is furniture for export to the European market. Last year, the company earned US$2 million from exports. This number, however, may not be reached this year.
To produce an export product, the company needs many other materials, such as paint and packing. Unfortunately, the price of these materials has increased as well.
Last year, 1kg of plastic packing cost VND23,000. Now, the price has risen to VND30,000. Prices for paint and wrapping paper have also increased by 30 and 50 per cent, respectively.
Transportation and labour costs are up by between 10 and 40 per cent. After the increase of all the income costs, Depco has had to increase the price of their products by 20 per cent.
But high prices are not the only thing challenging wood exporters. The falling US dollar has marked another hurdle, as it has reduced their profits by 3 per cent.
"We could have profits at this moment; however, we cannot stop producing", Tam said.
The company has asked their customers to change their prices, but not all of them have agreed with this.
Confronting this challenge, the company has pointed out some short-term measures, such as cutting down unnecessary costs and saving on materials.
"Now, the main goal is to stay in the market. Many wood producers in the province may close production if electricity costs increase," Hong said.
Recently, more than 160 enterprises and companies processing and trading wood have been set up in the province. One third of them are exporters. Wood products in Dong Nai are mostly exported to the EU, the
In 2000, the provincial wood export turnover was $20 million. This number increased to $60 million in 2006.
Recently, the association has been co-operating with some banks to help local companies financially. This is one of the measures to help companies overcome this difficult time.
(Source: VNS)
