VIETNAMESE LUXURY WOODEN FURNITURE MAKERS FEEL PAIN OF REGULATIONS AND DEFORESTATION

Author: HKFA.ORG | Time:2017-03-08

DONG KY, Vietnam – A mere 45 minutes northeast of Vietnam’s bustling capital city of Hanoi is the carpentry town of Đồng Kỳ, where conversations take place above the incessant din of electric saws cutting wood. A thin layer of sawdust coats every surface, and after a few hours you can feel the dust in your throat. Furniture showrooms filled with incredibly ornate table and chair sets that cost upwards of $10,000 line the main road, while workshops fill side roads and back alleys.
Renowned for its traditional hand-carved wood furniture, most of which is made from rare hardwood species such as Siamese rosewood (Dalbergia cochinchinensis), this town is ruled by the timber industry. It’s very big business: Vietnam’s overall timber and wood furniture exports were worth $7.3 billion in 2016, according to the Forestry General Directorate. The workshops and showrooms of Đồng Kỳ mainly serve clientele from the giant consumer market to the north, China. Situated less than 200 miles from the Chinese border, Đồng Kỳ is perfectly placed to ship traditional furniture to wealthy buyers.
There are complications, though. Much of the wood is sourced from other Southeast Asian countries, including Cambodia and Laos, according to recent reports from Forest Trends and Global Witness. Siamese rosewood is listed as “vulnerable” on the IUCN Red List of threatened species and is “virtually commercially extinct,” according to the UK-based Environmental Investigation Agency (EIA).
On the ground, Vu Quoc Vuong, head of the Đồng Kỳ Timber Association, explained that 70 percent of the furniture produced in the town goes to China. The rest is bound for the domestic market. Ornate Hongmu (which means “red wood” in Chinese and collectively refers several tropical rosewood species) furniture pieces are status symbols in both countries, despite the fact that they are very uncomfortable to sit on. According to a report from the EIA, sales in China’s Hongmu market exceeded $24 billion in 2014 and Vietnam remains the second-largest consuming market of rosewood.


In Đồng Kỳ alone, there are currently around 200 companies operating in the furniture trade, the bulk of which are very small and often family-run, according to Vuong. His association hopes to increase this number to 1,000 by 2020. Such a rapid increase would require a huge financial investment that doesn’t currently exist. In the meantime, furniture makers are running into a more immediate problem: access to the timber they need to maintain the status quo.
“Currently the Chinese have high demand to import timber and furniture but the situation is difficult because Vietnam, Laos and Cambodia have stricter policies than before,” Vuong said. He is referring to the various logging bans in place across Southeast Asia, in addition to international efforts to stop illegal timber trading and to protect rosewood species.
In September 2016 the Convention on International Trade in Endangered Species of Wild Flora and Fauna (CITES) placed all of the roughly 300 species of rosewood under trade restrictions. According to the landmark World Wildlife Crime Report issued by the United Nations Office of Drugs and Crime in May 2016, rosewood species are the most trafficked wildlife products in the world, accounting for 35 percent of wildlife seizures between 2005-2014. In value, these seizures were worth more than elephant ivory, pangolins, rhino horn and lion and tiger parts combined.
Now nearly all international trade of Dalbergia species requires a permit. Beginning in 2017, that includes almost half of the official Hongmu species.

In Đồng Kỳ’s furniture showrooms, many items are carved from species of rosewood and other rare hardwood species, meaning increased CITES protection is bad news for the town. However, in the bustling central market where woodworking shops buy timber to cut into furniture pieces, it is hard to see how regulations have had an impact.
Rosewood finds a way in
While Đồng Kỳ’s businesses may worry over a potentially diminishing tide of timber, plenty of rosewood is still making its way to the Vietnamese market. Phuc Xuan To, a program analyst with the international non-profit Forest Trends, explained that “it’s obvious that a lot of species which are banned from export by Laos and Cambodia are still being imported into Vietnam.”
In very diplomatic language, he added that, “this shows that there must be mechanisms that you can interpret as corruption or collusion to get them into the country.”
Customs data compiled by Forest Trends and provided to Mongabay shows that from January to the end of October 2016, roughly $116 million worth of sawn timber and rosewood logs entered Vietnam from Cambodia. While this total is much lower than the $276 million in rosewood imports clocked in the same period of 2015, it occurred despite Cambodia’s new ban on rosewood exports to Vietnam and an announced crackdown on timber smuggling by Hun Sen, Cambodia’s prime minister.
This initiative was effective early in 2016, when rosewood import values dropped from $26.2 million in January to just $3.4 million in February, but by May this figure had risen to nearly $13 million, a trend that continued into the winter.
This highlights the inconsistent nature of enforcement along the border. For instance, when government agencies step up inspections timber importers simply wait until the crackdowns end before resuming their trade, Phuc explains.
He adds that this data is not available to the public.
“We have been collaborating with the national timber associations for about five years and their mandate to understand exports, imports and production gives them access to this customs data,” he said. “We provide it to policymakers not only in Vietnam, but also in Laos and Cambodia.”
A sea of timber
Piles of various-sized pieces of timber stretch for several blocks along Đồng Kỳ’s market district. Traders selling wood to furniture workshops in the area seem to be doing brisk business. Motorbikes and three-wheel carts course through the narrow path that cuts between the trading stalls, picking up pieces of wood for delivery.
Most of the wood is called trac (Siamese rosewood) in Vietnamese. Much of it is imported from Laos and Cambodia. On a recent visit to Đồng Kỳ, traders didn’t express concern they are likely selling illegal timber. There was also no clear sign of government oversight or monitoring.
Vietnamese government officials couldn’t be reached for comment.
Vuong says that “some is legal, some isn’t. The authorities can’t check everything and it’s hard to tell what is and what isn’t [legal]…nobody manages it, so that’s why they cannot check the timber. There is no official administration here.”
Phuc Xuan, from Forest Trends, said that Vuong isn’t technically correct.

“There is a legal framework for the import and export of timber,” he said. “The big question, of course, is whether that framework is enforced on the ground.”
A complex collection of government bodies is tasked with managing the flow of timber in and out of Vietnam. At the border alone the customs department under the Ministry of Finance, the border police, the Forest Protection Department under the Ministry of Agriculture and Rural Development, and the Ministry of Health are all involved.
According to Phuc, in order to bring timber across the Cambodian border, for example, to a wood processing town like Đồng Kỳ, importers must have a log list showing which species they are transporting, in addition to their volume and value. Import companies also need a photocopy of the contract they signed with their Cambodian counterpart to bring wood products into the country.

 

Once timber arrives in Đồng Kỳ, the same ministerial departments are in charge of checking the legality of materials, minus the border police.
However, Phuc admits that association head Vuong is absolutely correct that little oversight is actually accomplished on the ground.
“I’ve talked to officials (in Đồng Kỳ) and they really care about the livelihoods of the local people,” he said. “They don’t want to cause any problems since the town has been operating like this for many years, and it’s about local livelihoods and the local economy.”
However, even without significant government oversight, the local economy is struggling. A cheerful middle-aged woman selling small pieces of sawn timber in the market (she didn’t give her name) described the current state of business as dwindling.
“There’s traditionally been a wood carving village here, so everything comes here,” she said. Though she isn’t worried about competition, she does lament that it is becoming harder to find high-quality timber, and this has hurt sales.
“Several years ago we made $45,000 to $90,000 per year,” she said, describing a relative fortune in a country where the GDP per capita is just over $2,000, according to the World Bank. “However, in recent years it’s been $22,000 to $27,000 per year.” Though the annual salaries she named can’t be independently verified, she did offer to sell a piece of timber for about $2, and inquired about help with exporting her products to the United States.
Furniture workshops hurting
Chu Van Nhung, who owns a timber workshop in Đồng Kỳ, tells a similar tale of struggling business. Sitting in his living room beneath portraits of Ho Chi Minh, Karl Marx, Vladimir Lenin and Friedrich Engels, a plastic film protects his big-screen TV from the town’s omnipresent sawdust.
“Four years ago I had 20 workers, now I only have four,” he said. “The strategy used to be just sell to China but now the availability of the material is lower.” He added that what’s now on sale at the open market doesn’t meet the exacting standards of Chinese buyers, who prefer timber that happens to be among the rarest in the world.
“Chinese only purchase precious timber, and there is less of that coming from Laos and Cambodia now,” Nhung said.
While this may seem like the result of logging bans and regulations doing their job, the reality is that there simply isn’t as much rosewood left in these countries as there used to be.
Data from the Food and Agriculture Organization of the United Nations (FAO) show that in 1990, 73.3 percent of Cambodia’s land area was under forest cover. By 2015 that figure had fallen to 53.6 percent. Phuc says that “if you go to forests there it’s not easy to find these species anymore. For example, loggers in Cambodia have to go to protected areas in Thailand to find them. The supply is vanishing.” Data analysis from the World Resources Institute notes that from 2001-2010, Cambodia’s tree cover loss accelerated more quickly than any other country in the world, in large part due to conversion for rubber plantations.
Whatever the cause, the source product is not as abundant as it once was. As a result, Nhung and other furniture company owners in Đồng Kỳ are eager to diversify to other markets.
“The plan is to shift to the European market but the workshop conditions cannot meet the requirements of these countries,” he said. “They have requirements not only for products but also for labor and working conditions. If the European countries had easier regulations like China, where they don’t worry about the environment, it would be easy to switch.”
Such mentions of Europe are common. According to a Forest Trends report with the most recent figures available, in 2013 just 6 percent of Vietnam’s timber exports went to the EU, and suppliers are aiming to increase that figure.
In the late autumn of 2016, Vietnam was in the process of negotiating a Voluntary Partnership Agreement (VPA) on clean timber licenses with the European Union. A VPA is a legally binding trade agreement brokered between the EU and timber-producing countries outside of the EU. Under this arrangement, Vietnamese timber exports to the EU will require certificates proving the legality of their origin and production process. It is still being negotiated.
Such certification is known as a Forest Law Enforcement, Governance and Trade (FLEGT) license. So far Indonesia is the only Asian country to have issued such a license, according to the EU FLEGT website. This system, if enacted, stands to provide safeguards for Southeast Asia’s forests, but Nhung is concerned. He believes small companies like his can’t meet the requirements.
“If FLEGT is applied to the whole country it will be a problem for villages like this,” Nhung said. Đồng Kỳ’s free-wheeling open timber market and chaotic workshops reinforce his point.
Indeed, Nhung’s workshop is filled with equipment and discarded timber – a dust-covered obstacle course that reflects a lack of concern over safety or work standards from Chinese buyers who simply want expensive and prestigious finished products in the form of furniture.

As a result, Đồng Kỳ’s small businesses face a conundrum. They are running out of high-quality rosewood for the Chinese market due to a combination of regulations and vanishing natural supply, and they can’t prove their products don’t contain illegal timber in order to sell to the EU.
As for Vietnam, about 14.8 million hectares (48 percent) of the country’s land area is forested, according to the FAO. However, 3.7 million hectares of that “forest” consists of planted tree cover – much of it in the form of acacia and eucalyptus plantations, which are useless as material for Hongmu furniture.
Skepticism over potential for change
Meanwhile Jago Wadley, a senior campaigner with the EIA, is skeptical that an agreement between Vietnam and the EU will improve this situation.
“The EU-Vietnam VPA announced in Hanoi in November is no more than a promise to work together going forward to agree to a…set of rules and obligations that might exclude illegal timber from Vietnam’s domestic market and in turn from its exports to the EU,” he told Mongabay in an email.

According to Wadley, the most important aspects of the VPA have not actually been agreed upon yet, and everything hinges on the Vietnamese government strictly implementing and enforcing regulations.
Wadley believes this is cause for concern.
“In theory, the imported timber legislation Vietnam has promised to pass…could, if properly designed and implemented, structurally remove a significant quantity of illegal timber from the Vietnamese market.”
This would completely upend Đồng Kỳ’s current business model, as workshops would be forced to procure legal timber. However, as Wadley explains, “this theory relies on exemplary design and implementation, while significant concerns remain about the will and capability of the government to ensure illegal wood is structurally prevented from being imported into the country.”
Such implementation would fall under the purview of government agencies such as the Forest and Customs Departments which, according to Wadley, have been key in facilitating the illegal timber trade and present glaring corruption threats.
Vuong, of the Đồng Kỳ Timber Association, recognizes the need to move away from China and toward clean timber. He hopes to find investment for a large industrial park in the town where small businesses can access the technology and processes needed to produce furniture that can be exported to stricter markets.
“Shifting sourcing would make it less risky and labor would be more secure,” he said. “It would also be more legal.”
Banner image: Carved rosewood furniture. Photo by Jane Tan Kok/Pixabay

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