Verifying the origin of exported wood: Current situation and solutions
In the current states faced by some enterprises in the wood processing and export industry regarding wood origin documentation for exports, AMC Vietnam will discuss this issue further.
I. The current state
The wood manufacturing and exporting industry is playing an important role in Vietnamese economy, with export turnover reaching around 14-15 billion USD each year. Major export markets such as the US, EU, Japan, and South Korea are increasingly imposing strict requirements for proving the legal origin of wood. This is demonstrated by Vietnam signing the VPA/FLEGT Agreement with the EU and having to comply with the Lacey Act of the United States. To meet these requirements, Vietnam has developed the VNTLAS System and issued Decree 102/2020/ND-CP, creating a legal framework for the management and certification of wood origin. However, the implementation of these regulations in practice still faces many challenges.
II. Challenges in verifying the origin
1. Document and paperwork
One of the biggest challenges that businesses face is ensuring continuity in the chain of wood origin documentation. Businesses often face the issue of lack of synchronization between the stages in the supply chain, from extraction to processing and export. For example, an imported wooden container may have complete customs documentation but lack a harvesting certificate from the country of origin. This creates gaps in proving the legality of the wood source, making it difficult for businesses to export their products.
2. Business capacity
Businesses, especially small and medium-sized enterprises, are facing resource challenges to meet the requirements for wood origin verification. Many businesses lack dedicated personnel with knowledge of legal matters and verification processes. The cost of maintaining the management system and complying with regulations also puts significant pressure on businesses. For example, a small business might have to spend hundreds of millions of dong each year on hiring consultants and building a wood origin management system.
3. Main causes
The main cause of the above difficulties stems from the lack of synchronization in the legal and management systems. The lack of a centralized database on wood origins makes tracing and verification complicated. The capacity of the regulatory agency is still limited in terms of inspection and supervision. A specific example is the overlap in inspection authority between customs, forestry, and market management agencies, leading to businesses having to deal with multiple points of contact.
4. Consequences
The difficulties in verifying the origin of wood have created many serious consequences for the industry. Businesses may miss export opportunities if they do not meet the requirements for proving origin. Production costs are rising due to the need to invest in management and certification systems. The complex inspection and origin verification procedures during customs clearance also incur many additional costs at the port, such as storage fees, and more seriously, they can affect delivery schedules, damaging the company’s reputation with customers. For example, some businesses have had to refuse large orders from the EU market because they could not provide sufficient documentation proving the wood’s origin as required by FLEGT.
III. Solutions
1. For businesses
To overcome the current difficulties, businesses need to proactively build an effective internal wood origin management system. This includes training a dedicated team of employees and applying technology in supply chain management. Businesses should enhance cooperation with partners in the supply chain to ensure the continuity of records. For example, some businesses have successfully implemented product journey management software, helping to track the origin of wood from the forest to the final product.
2. Solutions from government agencies
The state needs to strengthen the completion of the legal framework and build a national database on the origin of wood. Simplifying administrative procedures and enhancing the capacity of management staff are urgent tasks. The authorities need to support businesses with technical and informational assistance, while also promoting international cooperation in this field. A typical example is the implementation of an electronic single-window system for customs clearance, which helps reduce time and costs for businesses.
3. Technological solutions
Technology plays a key role in improving the efficiency of wood origin verification. The application of blockchain in traceability can ensure the transparency and immutability of data. Building a digital platform for supply chain management will help connect stakeholders and automate the verification process. Some pioneering businesses have successfully experimented with using QR codes and blockchain to track the product journey, thereby building customer trust in the product’s origin.
IV. Conclusion
Verifying the origin of exported wood is an essential requirement in the context of deep international integration. Resolving current challenges requires effort and close coordination between businesses and government regulatory agencies. Technological solutions, especially blockchain and digital platforms, will play a crucial role in enhancing management efficiency and increasing information transparency. To achieve this goal, a suitable implementation roadmap is needed, taking into account the conditions and capacities of the stakeholders involved.