SRD VNGO FLEGT Policy recommendations QIII IV 2015 ENG ver

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VNGO - FLEGT
QUARTER III - IV/2015

FOREST LAW ENFORCEMENT - GOVERNANCE - TRADE (FLEGT)

THE ALARMING USE OF ILLEGAL TIMBER BY
HOUSEHOLD PRODUCERS
Hoang Quoc Chinh, Nguyen Quang Tan

KEY MESSAGE
WITH A LONG TRADITION OF SMALL
PRODUCERS, VIET NAM HAS A GREAT
MULTITUDE OF TIMBER PROCESSING
HOUSEHOLDS WHO USE VARIOUS
TIMBER MATERIALS FOR THEIR
PRODUCTION. MUCH OF THIS IS
NATURAL TIMBER OF UNCLEAR
ORIGIN (WITHOUT VERIFICATION
DOCUMENT), COMMONLY USED
DUE TO FAVORABLE FACTORS SUCH
AS DISCOUNTED PRICE, FLEXIBLE
SUPPLY, AND EASE OF ACCESS FOR
HOUSEHOLD PRODUCERS. THIS IS
BECOMING A CHALLENGE FOR VIET
NAM’S TIMBER PRODUCTION SECTOR,
IN LIGHT OF THE ONGOING TRADE
AGREEMENT WITH THE EUROPEAN
UNION

WHOSE
REGULATORY
SYSTEM IS QUITE STRICT ON TIMBER
LEGALITY. IN ORDER TO IMPROVE

INCLUDING
THE LEGALITY COMPLIANCE OF
HOUSEHOLD PRODUCERS IN THE
CONTEXT
OF
INTERNATIONAL
TRADE, POLICY SHOULD AIM TO
PROMOTE COOPERATIVE BUSINESS
AND FACILITATE THE ACCESSIBILITY
TO LEGAL TIMBER, ALONG WITH A
COLLABORATIVE MECHANISM TO
SUPERVISE LOCAL PRODUCERS.

INTRODUCTION
Viet Nam is a major
producer of timber products.
With its own forest resource
and access to external
sources of timber material,
Viet Nam is currently the

1
The alarming use of illegal timber by
household producers

8
Unclear Legal Framworks In Plantation
Timber, from Illegality To Legality In The
Vietnam Context Joining Vpa/Flegt.

14
Occupational Safety And Environmental
Protection - Two Factors Needed For Legal
Timber

20
Creating
Strong
Linkages
Among
Woodcraft Villages To Win On Home Turf

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largest timber processing hub in South
East Asia and the 6th largest in the world
(VNForest 2015). Timber input such as logs,
lumber, and planks from various sources

enter numerous processing units run by
households in the country, to be made
into products for household and office,
woodcraft items, construction materials,
etc. for domestic consumption and export.
With such complex operation and diverse
material sources, it is rather difficult to
achieve good compliance with regulations
on timber legality.
The paper focuses on timber legality
compliance by processing households.
Based on a survey by VNGO-FLEGT in Hoa
Binh, Nghe An, Binh Dinh, Kon Tum in
2015, the paper describes the reality of
illegal timber present in processing units in
violation of the law. It then proposes some
solutions to improve and supervise the
legal compliance of these producers.

CURRENT POLICY VS ACTUALITY
In terms of policy, the Government has
passed regulations on timber legality for
processing operations. Specifically, legality
verification documents are packing lists
(provided by forest planters), value-addedtax receipts (applied to timber purchased
from organizations), and Confirmation of
forest ranger’s hammer mark (see Box 1).

Box 1: Legality requirement for timber
material for processing

Timber material used as input for processing
must have the following proof of legal origin:
Packing list (Circular 01/2012/BNNPTNT
Article 12,14,16,20; Circular 42/2012/
BNNPTNT Article 1)
VAT receipt (for purchase from company)
(Circular 01/2012/BNNPTNT Art. 20)
Confirmation of forest ranger’s hammer
mark (applicable to any log with larger
end’s diameter >= 25cm and length>= 1m
and either from natural forest or of rare
and endangered species from plantation,
imported log without hammer mark of
original country, and resale of seized logs)
(Circular 01/2012/BNNPTNT Art. 9)
Source: Ministry of Justice

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However, the level of compliance in
actuality is low. There are currently tens of
thousands of small household producers
with a diverse timber supply. Among
these producers, timber without legality
verification (illegal timber), usually from

natural forest is commonly used. Illegal
timber is bought at a comparatively low
price and in varied quantity; very suitable
to household production.There is no
official data on timber material used by

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households due to the lack of formal records
by households, and the “sensitivity” of
natural timber. A survey of 112 household
producers in provinces of Nghe An, Binh
Dinh, Kon Tum reveals that about 65% of
households do not have VAT receipt for
their purchase, 75% do not have a packing
list for acquired timber input, and 41% do
not have confirmation of hammer mark for
applicable timber material (see Chart 1 for
data for each province).

Chart 1: Percentage of household producers
without timber legality verification
100%
80%
60%
40%
20%
0%
VAT receipt

Packing list

Nghe An

Binh Dinh

Confirmation of hammer
mark
Kon Tum

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AWARE OF REGULATIONS, STILL
NOT COMPLY
Producers usually have good access
to information and akeen awareness of
requirements on timber legality. Some of them
have a close relationship with local authority,
especially key players such as People’s
Committee, Forest Ranger, Office of Natural
Resources, etc. The survey in Nghe An, Binh
Dinh, Kon Tum shows that 49% of households
are aware of timber legality verification such

as packing list, VAT receipt, confirmation of
hammer mark (though may not know the
precise name of the regulation).
The ringing question is why these
households deliberately violate the law,
even though they are quite aware of the
consequence. First, it is necessary to analyze
the diverse timber supply in Viet Nam, which
can be broken down into the following sources:
i. natural timber imported from other
countries (Laos, Myanmar, Africa, South
America, etc.).

ii. natural timber illegally harvested incountry or smuggled from outside (this is
illegal timber).
iii. natural timber seized by forest rangers
and resold(most comes from (ii) and thus
becomes “legalized” by the government’s
resale operation).
iv. plantation timber and dispersed trees
purchased from local areas.
Most small producers can only access
timber source (ii) and (iv), of which source (ii) is
illegal, without proper verification documents.
In fact, most of them acquire timber in small
volumes from middlemen or local planters.
Some producers attempt to purchase timber
with VAT receipts (as proof of legality, so that
they can sell and transport the timber products
outside the local area) but large timber

companies refuse to sell their timber in small
volumes to small producers.
Most household producers have limited
production capacity, limited capital, small
Group discussion with household producers in Kon Tum
Source: Provided by author

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storage areas, and small-sale markets, so they
purchase a very modest volume of timber (few
m3/year). Whereas, timber from source (i) and
(iii) is only available for large-quantity order,
thus accessible to big companies only.
Box 2: Timber supply for household
producers in Kon Tum city
The research team interviewed a small
producer named L.H.S.,in a woodcraft village
inKon Tum.He used about 6 m3of natural
timber in 2014, mostly Sao xanhandGioi gung
purchased without any legality document
from a sawmillin Ngoc Hoidistrict;the rest of
the material is supplied by his own customers
for individual orders.
Another producer named P.T. used about

10 m3of natural timber, mostly planks and
boards supplied by middlemen from Sa Thay
district.
These cases of illegal timber are common
in Kon Tum, without legality documents as
specified in Box 1. Most of these households
are unable to participate in the government’s
auction of seized timber because an auction
usually involves a large volume of hundreds
of m3 oftimber, requiring a large investment
capital and spacious storage area.
Source: SRD 2015

LAW ENFORCEMENT CAPACITY
IS INSUFFICIENT IN LIGHT OF
INTERNATIONAL TIMBER TRADE
AGREEMENT
As indicated above, the Government
has passed regulations on timber legality
but in reality violations of the law occur
more frequently than expected. Beside the
deliberate violations by household producers

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due to inaccessibility to legal timber, as
indicated in the above passage, another
cause of the prevalence of illegal timber is the
insufficient local law enforcement. At district
level, the district Forest Ranger is in charge of

managing timber activities from harvesting,
transportation, and processing. The number
of rangers, especially office-holder positions, is
insufficient to meet the workload. The current
law specifies that every 1000 ha of forest has
01 forest ranger (Decree 119/2006/ND-CP),
and every 500 ha of special-used forest has 01
office-holding ranger (Decree 117/2010/NDCP). With 13.9 million ha of forest (VNForest
2014) it would need 16,000 rangers, whereas
the whole country has about 12,000 rangers.
In each commune that has timber processing
activities, only 01 local ranger is responsible for
supervision of all timber processing activities.
With limited Government budget, insufficient
manpower and machinery, inadequate
renumeration and allowance, it puts much
constraint on the law enforcement at the local
level.
In the context of international timber trade
agreements, facing strict legality requirements
from major export markets like the USA and
EU, the current state of illegal timber in Viet
Nam will negatively impact its export.
The EU market is regarded as stable, with
high margin of added value because the EU
mostly imports finished timber products
instead of lumber ( see Box 3 ) .
Since March 2013, The EU has implemented
the Timber Regulation (EUTR), tightening
the control of legal timber and timber

products entering EU markets. In addition,
the Vietnamese Government promises to
expedite the timber trade negotiation with
the EU in 2016, showing its commitment to

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strict requirementson timber legality over
the whole supply chain, from harvesting to
transportation, processing, consumption and
export. Nonetheless, the actual state of noncompliance with timber legality verification,
on the part of household producers in Viet
Nam, could result in the violation of the timber
trade agreement with the EU.

Box 3: Viet Nam’s timber export to the
EU in the period 2012 – 2015
In 2014, exports of timber products
tothe EU reached 703 million USD, an
increase of 100 million USD, compared to
608 million USD in 2013. Exports in the
first 8 months of 2015 is 442 million USD.
The EU is currently the 4th largest timber

import market from Viet Nam.
The average growth of timber export to
EU from 2012 – 2014 is 2.2% per year.
Source: Forest Trends 2015

CONCLUSION AND RECOMMENDATIONS:
Non-compliance, or violation of various regulations on timber legality is common
in household producers. Besides the deliberate violation on the part of households for
profit or livelihood purposes,there are also some external reasons, such as households’
inaccessibility to legal timber, which in turn shapes the business operation and compliance
capacity of these households.
In order to support household producers to adapt and thrive in the new setting of
international trade, the paper would like to propose some simultaneous solutions to
improve legality compliance:
- First, it is imperative to prevent illegal timber from being used as input in households’
processing units. As mentioned above, illegal timber is usually harvested from natural
forest in the country or smuggled from outside. Local governments need to devise effective
monitoring and impose just penalties on all cases of illegal timber activities.
- Simultaneously, it is crucial to improve households’ accessibility to legal timber by
promoting cooperative business and even management board modelsfor woodcraft
villages.The management board in each woodcraft village is elected by household
producers in that village and is responsible for timber supply contracts, logistics and storage
management, marketing, and provision of support service for legality verification. When
operating in a cooperative format, household producers collectively have more chance of
getting legal timber.

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- Third, when issuing business license to any household producer, conditionality must
be imposed upon, such as household’s responsibility for timber legality verification. There
needs to be a monitoring mechanism between the local authority and community, in light
of limited resourcesof local authorities.
-Fourth, in the long run, there needs to be a suitable strategy to strengthen law
enforcement capacity at the local level. In the context of the Government’s strategy on forest
protection and development, as well as its ambition on timber trade, it is a prerequisite
to have a strong forest ranger force in quantity and quality, sufficient equipment, and
adequate renumeration mechanisms,in order to enhance forest development and legality
of the timber supply chain. This will lead tothe development of Viet Nam’s timber industry
in the context of international trade development.

REFERENCES
Voluntary Partnership Agreement, Annex 2 Legality Definition (version 8).
VNForest, 2015
Circular 01/2012/TT-BNNPTNT on timber legality documentation and
verification. MARD, 2012
Circular 42/2012/TT-BNNPTNT on revising some articles of Circular 01/2012/
TT-BNNPTNT. MARD, 2012
Circular 35/2011/TT-BNNPTNT on harvesting timber and non-timber
products. MARD, 2011
Decree 119/2006/NĐ-CP on organization and operation of Forest Ranger.
2006
Decree 117/2010/NĐ-CP on establishment and management of special-used
forest. 2010

Decision 3322/QĐ-BNN-TCLN on the state of national forest in 2013. VNForest,
2014
European Union’s Timber Regulation. EU, 2013
Report of Trade on timber and timber products between Viet Nam – EU.
Forest Trends, 2015

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UNCLEAR LEGAL FRAMWORKS IN PLANTATION TIMBER,
FROM ILLEGALITY TO LEGALITY IN THE VIETNAM CONTEXT JOINING
VPA/FLEGT

Hoang Xuan Duc ( RESED )

KEY MESSAGE
RECENTLY,
MANY
PLANTATION-FOREST
HOUSEHOLDS LIVING NEXT TO EACH OTHER HAVE
BEGUN SELLING TIMBER TO THE SAME NEGOTIATORS,
OR COOPERATE TOGETHER TO HARVEST TIMBER.
THIS TREND IS OCCURRING IN SOME LOCAL
AREAS. HOWEVER, LEGAL FRAMEWORKS HAVE

NOT BEEN YET REGULATED TO SPECIFY A REPORT
EVALUATION OF ENVIRONMENTAL IMPACT (REI)
FOR THE ABOVE TWO CASES WHEN TOTAL FOREST
AREAS REACH TO BE MORE THAN 200 HECTARES.
IN A CONTEXT THAT VPA/FLEGT IS GOING TO
BE SIGNED, PLANTATION-FOREST TIMBERS ARE
HARVESTED WITH DECENTRALIZED AREA OF
MORE THAN 200 HECTARES, IF THEY ARE NOT
REGULATED IN DECISION APPROVED REI, THEY
WILL BECOME ILLEGAL. THEREFORE, IT IS VITAL TO
HAVE REGULATIONS AND CONCRETE GUIDELINES
ABOUT REI IN THESE CASES TO MEET REQUIREMENTS
OF LEGAL TIMBER.

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INTRODUCTION
With applicable policy and socialized
direction of forestry, plantation-forest area has
increased rapidly during recent decades, from
1 million hectares in 1990 to approximate 3.7
million hectares in 2014. Plantation forest is a
livelihood output partly contributing to the
income of 1.4 million households in Vietnam.
With plantation-forest areas of rapid growth,
it does induce some inevitable negative
impacts on the environment during plantation
establishment and timber harvesting. Vietnam

legislation regulates if harvesting timber in a
plantation forest with a decentralized area of
more than 200 hectares, an REI is required to
be conducted.


QUARTER III- IV/2015

According to investigation results in
Hoa Binh, Nghe An, Binh Dinh and Kon Tum
provinces (August 2015), this policy brief
points out that in many cases, many plantationforest households sell to timber-harvesting
negotiators. Alternatively, households with
plots next to each other equating to more than
200 hectares, tend to cooperate together. This
phenomenon has been occurring recently.
However, REI in the above two cases has not
been implemented. Because regulations in
the legal frameworks are not clear about these
above cases, addressing this will become
more necessary within the context of Vietnam
joining the Voluntary Partnership Agreement
addressing
Forest
law
enforcement,
Governance and Trade (VPA/FLEGT).

Picture 1. Research areas

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LACK
OF
SPECIFIC
LEGAL
FOUNDATIONS AND ENFORCEMENT
AGENTS
Legal frameworks do not specify in
detail that plantation-forest harvesting by
households having adjacent areas, with a
total area more than 200 hectares, must
produce an REI (see box 1). Environmental
protection law in 2014, Decree 18/2015/NĐ-CP,
regulates producing an REI when harvesting
plantation-forest projects of more than 200
hectares, which are production forest, apply
clear- cutting methods, and have parts with a
decentralized harvesting design. Nevertheless,
these documents do not clearly address cases
in which (i) individuals or organizations harvest
plantation-forest of multiple forest owners with
large and adjacent areas, (ii) many households
with neighboring plots cooperate together
to harvest an area equating to more than
200 hectares. Moreover, the plantation-forest
timber harvesting documents of households
are regulated in Circular 35/2011/TT-BNNPTNT,
and also do not include REI for harvesting case
with more than 200 hectares.

Box 1: Regulations about Environmental
Regulation and plantation-forest harvesting
documents:
1. Factors necessitating REI:
- Projects have a risk impact on the
environment (Article 18, Environment Law in
2014)
- Forest harvesting projects of more than
200 hectares of plantation forest, which are
production forest with an applied clear-cutting
method, and has harvesting in decentralized
areas (Article 12, decree 18/2015/NĐ-CP)
2.
Harvesting
document:
includes
harvesting
registration
and
expected
harvesting production (Article 19, circular
35/2011/TT-BNNPTNT)

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The
responsibilities
of
approving
plantation-forest harvesting documents of
households, who have their own investment
or Government support, belong to the
Communal People’s Committee. But the
responsible officers within the Communal
People’s Committee do not acquire regulations
about REI for forest-plantation harvesting with
large areas, therefore, it does not meet the
requirements for harvesting owners to carry
out this mission. In regards to investigation
results of the potential impact evaluation of
VPA on livelihood vulnerability in Nghe An and
Ha Tinh, 100% of forestry officers interviewed
did not know the correct regulations related to
REI when harvesting forest- plantation of more
than 200 hectares.

FOREST-PLANTATION HARVESTING
OF MORE THAN 200 HECTARES
WAS
INCREASINGLY
PREVALENT
WHEN LOCAL PEOPLE SOLD STAND
PLANTATION TIMBER TO NEGOTIATORS

According to investigations in 4 provinces,
only approximately 10% is plantation-forest
harvesting. Because the remaining plantationforest households do not have enough human
resources or equipment to harvest and do not
have transportation to deliver to distribution
agents, they must sell to negotiators (see
in box 2). These negotiators are individuals
or organizations who have strong capacity,
knowledge and experience in plantationforest harvesting and have the ability to access
and provide stable outputs. On the other hand,
when forests become harvestable, households
want to sell to get the best price; buyers will
purchase timber in neighboring plots for
convenience and cost-efficiency. In order to
facilitate the purchase of large areas of timber,
decentralization, fast capital cycles, and cost/

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time efficiency are required. Negotiators
purchase the timber, then extract the desired
amount of timber to be transported to the
point of use immediately.
The number of negotiators in each location
is not much. In regards to Hoa Binh provinces,
total forest area in 3 districts is 17.899 hectares;
however, only approximately 100 negotiators
buy the timber in this area - each negotiator will

purchase approximately 179 hectares for each
harvesting cycle. In Nghe An plantation-forest
harvesting covers 15.673 hectares, with only
70 negotiators - each negotiator purchases
about 224 hectares. Nevertheless, negotiators
have a good economic understanding, meet
equipment requirements and have access to
transportation. This often means the purchased
amount will often be larger than the average.
Therefore, cases of negotiators collecting
plantation forest from multiple households,
equating to more than 200 hectares, are
occurring in some locations.
Box 2: Plantation forest people have
to sell forest to negotiators
Because capital cycle is quite fast,
they purchase an average of 400 to
500 hectares. They only purchase
the households borrow the forest
of forest state-owner company and
Youth Volunteer Team, focus on some
communes with large forest areas. In
2014, we purchase a compartment with
more than 220 hectares. In communes
with small forest plantation areas, mainly,
we purchase forest areas from different
individuals (Mr. N.D.B in Quy Hop district,
Nghe An province said)

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Villagers don't have transport means for post-harvest activities
Source: Provided by author

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THE LINKING TREND AMONG
HOUSEHOLDS HAS BEEN CREATING
LARGE AREAS DURING HARVESTING
To avoid the negotiator’s pulling price
and improve the economic value of
plantation-forest, households in some
places have collaborated to open an
extraction route, harvest together, rent
transportation to deliver and sell to agents.
Set extraction routes only need to be
created for the first harvesting cycle - other
cycles only need to be upgraded and fixed
before harvesting (see in box 3). This may
prove to be a feasible solution for plantation

and harvesting households In the future,
applying this trend in many areas may be
possible, especially, mountainous districts
which have complex landscapes and
difficult transportation access.
Box 3: Linking trends among
households
in
plantation-forest
harvesting
Without extraction routes, acacia
plantations in village can only be purchased
at 25- 30 million VND per hectare. In village
now there are 15 households with areas next
to each other, equaling 209 hectares in total.
They collect the cost themselves to open
a route, then harvest together, rent a car to
deliver and sell the timber harvested. (Mr. VL,
Hoai An district, Binh Dinh province said).

Based on the research group’s
evaluation,
households
cooperating
among themselves when harvesting more
than 200 hectares appeared in almost
research areas which were mountainous
districts.
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SUCH TIMBER WILL BECOME
ILLEGAL WHEN VPA/ FLEGT IS SIGNED
With the two above cases, it is evident
that plantation-forest harvesting of many
households with more than 200 hectares,
in decentralized areas, will continue
occurring in the future.
Meanwhile, the recent Legal Definition
(LD) draft requires timber harvesting of
more than 200 hectares (of plantationforest) to have a Decision approved REI.
When VPA/FLEGT is signed, harvesting of
more than 200 hectares without a Decision
approved REI would render the amount of
timber harvested in these areas as illegal.
Many plantation and harvesting forest
households do not produce any document
related to environment protection.
According to database investigations,
100 % of plantation and harvesting forest
households have not had or applied REI.
Meanwhile, households sell to negotiators
to harvest and consume. Moreover,
plantation forest households sell forest
to negotiators as well as they cooperate
together during harvesting with more
than 200 hectares also occurred in whole
research provinces.

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CONCLUSION AND RECOMMENDATIONS:
Based on recent regulations, timber harvested from plantation-forest of more than 200
hectares, without a Decision approved REI, will become illegal timber. Additionally, the
VPA/ FLEGT in Vietnam will dictate that not only timber and timber products in EU market
must be legal, but also timber in domestic markets must be legal.
Therefore, consuming the above legal timbers will be difficult and impact on income
and also plantation based livelihoods. In order to ensure their inclusion in the VPA/
FLEGT process, and also avoid their infringement on the law, we suggest some following
recommendations:
Decree 18/2015/NĐ-CP needs to make clear whether there is or is not a required REI in
purchasing plantation-forest from households with large decentralized areas, or households
with areas next to each other cooperating among themselves to harvest more than 200
hectares.
To implement this recommendation in provinces with large plantation areas, the
People’s Committee needs to provide guideline documents to relevant agencies and
authorities in provinces and districts. The People’s Committee of districts and communes,
the Forestry Department and forest owners are organizations that need to acquire the list
of plantation-forest households to advocate their perception and knowledge about legal
timber regulation; especially of individuals and organizations in areas which frequently
purchase forest to harvest.

REFERENCES
Report of legal compliance assessment of households in Hoa Binh, Nghe An,
Binh Dinh, and Kon Tum province.
Report of community-based forest management’s impact on livelihood in

Con Cuong district, Nghe An province.

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OCCUPATIONAL SAFETY AND ENVIRONMENTAL PROTECTION
- TWO FACTORS NEEDED FOR LEGAL TIMBER
Nguyen Thi Dung (The Northwest Cooperation Development Centre)
Nguyen Quang Tan (The Center for People and Forests)

KEY MESSAGE
REGULATIONS
PROTECTION

ON

AND

THE

ENVIRONMENTAL

OCCUPATIONAL

SAFETY

FOR TIMBER PROCESSING HOUSEHOLDS HAVE
BEEN ISSUED BUT THE ENFORCEMENT OF SUCH
REGULATIONS REMAINS LOOSE AND INADEQUATE,
DUE TO THE LACK OF INVESTMENT CAPITAL OF
HOUSEHOLDS

AND

INEFFECTIVE

SUPERVISION

OF ADMINISTRATIVE AGENCIES. THIS NEGATIVELY
AFFECTS WORKER AND COMMUNITY HEALTH,
POLLUTES THE ENVIRONMENT, AND INCREASES
THE VULNERABILITY OF PROCESSING HOUSEHOLDS
ONCE

VIETNAM

ENFORCEMENT,
VOLUNTARY

SIGNS

THE

GOVERNANCE

PARTNERSHIP

FOREST
AND

AGREEMENT

LAW
TRADE
(VPA/

and Kon Tum (Picture 1) from June – October
2015 show that processing households do not
meet regulations on environmental protection
and occupational safety. This negatively affects
worker and community health, pollutes the
environment, and increases the vulnerability
of processing households during the
implementation of the VPA/FLEGT. In order
to deal with these problems, we propose
policies to strengthen the enforcement of
regulations and assist households to comply
with regulations on environmental protection
and occupational safety.

FLEGT). IT IS NECESSARY TO ENACT POLICIES TO
PROVIDE HOUSEHOLDS WITH CAPITAL SUPPORT
AND

STRENGTHEN

THE

ENFORCEMENT

OF

REGULATIONS ON ENVIRONMENTAL PROTECTION
AND OCCUPATIONAL SAFETY, IN ORDER TO DEAL
WITH THESE PROBLEMS AND FULFILL THE FLEGT
INITIATIVE.

INTRODUCTION
Vietnam is in the process of negotiating
the VPA/FLEGT with the European Union. The
two important annexes of the VPA, namely
the Legality Definition (LD) and Timber
Legality Assurance System (TLAS), impose
requirements on environmental protection
and occupational safety in timber processing.
However, there is a big gap between the
issuance and enforcement of these regulations.
The research outcomes of the EU-FLEGT project
in provinces of Hoa Binh, Nghe An, Binh Dinh,

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Picture 1. Research areas


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NONCOMPLIANCE
WITH
REGULATIONS ON ENVIRONMENTAL
PROTECTION AND OCCUPATIONAL
SAFETY OF PROCESSING HOUSEHOLDS
IS AT AN ALARMING LEVEL

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Box
1:
Requirements
for
environmental
protection
and
occupational
safety
for
timber
processing households
1. Regulations on environmental
protection commitment (Articles 29, 32, 33
– Decree No. 29/2011/NĐ-CP)
2. Regulations on occupational safety

and hygiene (Labour Code: Chapter IX,
Item 1, Articles 137 and 138)
3. Regulations on Fire Prevention and
Fire-fighting (Articles 9, 16, 17 Decree No.
35/2003/NĐ-CP)

In its development, Vietnam’s timber
processing industry has seen a sharp increase
of household processing establishments
in many localities. It is imperative to take
into consideration measures to protect the
environment and ensure occupational safety.
Legal documents have addressed this (Box
1). Accordingly, owners of timber processing
establishments have to submit a statement
on environmental protection which should
be then approved by the district or communal
People’s Committee.

Chart 1: The rate of processing households without internal protocol on fire prevention
and firefighting and occupational safety

96%

96%

No internal protocol on fire
prevention and firefighting

No internal protocol on

occupational safety
74%

62%

78%
66% 66%

70%

Hoa Binh

Average 4 provinces

58%
22%

Nghe An

Binh Dinh

Kon Tum

However, very few households have
received a document approving their
environmental protection statement, while
others are not even aware of the regulations.
More seriously, violations of environmental
protection are becoming very common. For
example, waste generated during sawing,

planing, and sanding is discharged directly into
the environment without being collected and
treated, causing pollution. Small processing
factories are located in the houses or close to
residential areas, making noises and affecting
the daily life of the local community.

Similarly,
the
implementation
of
regulations on occupational safety of all woodprocessing businesses remains very limited.
Surveys at nearly 200 small wood-processing
establishments in the provinces of Hoa Binh,
Nghe An, Binh Dinh and Kon Tum showed
alarming figures: 70% of the households do
not have any rules on fire prevention and
firefighting; 78% of households do not have
rules on occupational safety (for details see
chart 1). This is without including those with
poorly or inadequately displayed rules.

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QUARTER III- IV/2015

Image 1: It is normal that the jigsaw’s blade breaks during
operation, threatening workers
Source: Provided by author

When being asked about measures
for environmental protection and
occupational safety, 100% of the workers
said they have never participated in
a training course on environmental
protection and occupational safety.
All operations are mainly based on the
experiences of the workers and their
employers. Workers are not fully equipped
with labor-protective equipment such
as gloves, masks, goggles and earplugs.
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16

Almost all machines and equipment used
in processing households are self-installed
with a lack of protective chassis, so they
cannot ensure occupational safety (Image
1). The factories do not have necessary
instructions on safe operation for workers.
In many factories, old-fashioned jigsaws
are still being used, posing risks to workers.
The electric system in the processing
factories is unsafe and prone to fire, thus

affecting occupational safety.


QUARTER III- IV/2015

CONSEQUENCES OF THE NONCOMPLIANCE WITH REGULATIONS
ON ENVIRONMENTAL PROTECTION
AND OCCUPATIONAL SAFETY
Environmental
protection
and
occupational safety are two very important
items in the manufacturing process, which
ensure the sustainable development of
wood processing facilities and contribute
to the successful implementation of the
FLEGT initiative in Vietnam. The noncompliance of processing household will
lead to serious consequences:

Sustainable Rural Development

lives. The most common waste at wood
processing establishments is sawdust.
According to a survey conducted in Huu
Bang wood processing village, every year
the villiage processes as much as 200,000
– 300,000 square meters of timber and
produces as much as 100,000 kilos of
sawdust, which directly affects workers and
people nearby, causing eye, respiratory

and skin infections1 .

First, no waste treatment and no
guarantee of working conditions for
workers will directly affect their health and

Image 2: Ms. Bui Thi Hieu – Hoi An City – had her arm
cut during working at a wood processing factory. She
is now using a prosthetic arm
Source: Provided by author
Information from an Article on “Which measure for the sustainable development of timber processing industry
in the context of the implementation of the VPA?” Quarter I-II/2015, Do Thi Ha An, SRD

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QUARTER III- IV/2015

Second, not being ready to comply with
regulations on environmental protection
and occupational safety will increase the
vulnerability of timber processing households
once Vietnam signs the VPA. Although
household processing establishments do not
directly participate in the supply chains for
export to Europe, they have to comply with LD

and TLAS under the VPA once the agreements
come into force. As mentioned above,
requirements on environmental protection
and occupational safety are two of the
requirements mentioned in the LD. It means
that only if these establishments comply
with their committment on environmental
protection and occupational safety will their
timber be considered legal.

others are not fully aware of the importance
of regulations on environmental protection
and occupational safety so they do not comply
with them. (Box 2)

WHY DO TIMBER PROCESSING
HOUSEHOLDS
NOT
COMPLY
WITH REGULATIONS ON THE
ENVIRONMENTAL PROTECTION AND
OCCUPATIONAL SAFETY

MANAGEMENT
RESPONSIBILITIES

Lack of capital and inadequate awareness of
the need to implement measures to protect the
environment and ensure occupational safety
are the two reasons for processing households

not to comply with such regulations.
Surveys show that processing households
do not comply with regulations on
environmental protection and occupational
safety because they do not have enough
money to buy waste treatment and protection
equipment for workers. They attributed the
lack of money to slow sales or low prices.
Other households, most of which do not
have a business license, do not comply with
the regulations on environmental protection
and occupational safety because they have
no information about such regulations. A few

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18

Box 2. Timber processing households’
subjectivity about occupational safety
Timber processing households think
that first-aid kits are not necessary. “We do
not need first-aid kits, if something happens
to any worker, we can take him/her to the
clinic,” said a sawing factory owner in Hoai
An District, Binh Dinh province.

AGENCIES’

In addition to people’s non-compliance,

another external contributing factor,
leading
to
the
non-compliance
with regulations on environmental
protection and occupational safety, is
that administration agencies have yet
to take drastic measures to enforce the
regulations. Local staff’s acquiescence
makes people feel free not to comply with
such regulations because they know they
will not be fined. Additionally, the lack of
local staff, especially qualified staff, leads
to inadequate supervision of operation of
timber processing households. (Box 3)


QUARTER III- IV/2015

Sustainable Rural Development

Box 3: the supervision of compliance on environmental protection and occupational
safety remains formalistic
In most surveyed localities, one of the big problems is the lack of staff, especially qualified
staff. Therefore, the supervision of the implementation of measures to protect the environment
and ensure occupational safety remains formalistic. When the local ranger in An Tuong
Tay Commune, Hoai An District, Binh Dinh province, took the survey team to a processing
establishment, it was no longer there. Neighbours said the establishment was moved to
another location a year before, but the local ranger had no information about that.

SUMMARY AND POLICY RECOMMENDATION:
Lack of investment capital, inadequate awareness, and poor enforcement of
administrative agencies are the main factors leading to processing households’ noncompliance with regulations on environmental protection and occupational safety.
Therefore, we propose some measures to strengthen the enforcement of such regulations
and contribute to fulfill the FLEGT initiative in Vietnam, as follows:
-There should be a preference for policies offering loans or capital contributions by
the state and people on a 50/50 basis, to invest in waste treatment equipment and labor
protection instruments for small wood processing establishments.
- Before signing the VPA/ FLEGT, it is necessary to inform wood processing establishment
owners and organise outreach campaigns to change people’s behaviour towards
environmental protection and occupational safety, to raise awareness and change the
unsustainable practice of wood household processing establishments.
- Organising training courses to forest management officers, to improve the capacity to
supervise the implementation of regulations on environmental protection and occupational
safety, at the grassroots level.
-There should be detailed regulations on supervision mechanisms at processing
establishments, for the implementation of regulations on environmental protection and
occupational safety, which stipulate the human resources, time, and frequency of the
supervision, as well as punishments for officers’ negligence, or people’s non-compliance
with the regulations.

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CREATING STRONG LINKAGES AMONG WOODCRAFT VILLAGES
TO WIN ON HOME TURF
Nguyen Van Hoang, Tran Nam Thang from
Consultative and Research Centre on Natural Resources Management
(CORENARM)

KEY MESSAGE
AT PRESENT, VIETNAM HAS MORE THAN 300

VIETNAM IS NOW PART OF MANY FREE TRADE

WOODCRAFT VILLAGES OPERATING AS TIMBER

AGREEMENTS (FTAS), INCLUDING THE TRANS-

PROCESSING

THE

PACIFIC PARTNERSHIP (TTP) AGREEMENT AND THE

LINK AMONG THEM IS STILL POOR, BOTH IN

FOREST LAW ENFORCEMENT, GOVERNANCE AND

PRODUCTION AND TRADING. THE SCALE OF THESE

TRADE VOLUNTARY PARTNERSHIP AGREEMENTS

VILLAGES IS GRADUALLY NARROWED DUE TO

(VPA - FLEGT), IT IS ESSENTIAL TO BUILD UP STRONG

LOW PRODUCTIVITY AND WEAK CONSUMPTION

LINKAGES

ON THE MARKET. IN THE CURRENT CONTEXT

AND CALL FOR MORE SUPPORT FROM THE STATE

OF GLOBAL INTEGRATION, ESPECIALLY WHEN

AND RELEVANT AGENCIES, IN ORDER TO RAISE

VNGO - FLEGT

HOUSEHOLDS.

20

HOWEVER,

AMONG

WOODCRAFT

VILLAGES

QUARTER III- IV/2015

Sustainable Rural Development

VPA – FLEGT. These agreements are
expected to open up many opportunities
and bring about remarkable benefits.
However, they are believed to pose
tremendous challenges, thus reducing
the competitiveness of locally-made
products.

CAPACITY AND SHARPEN COMPETITIVENESS ON
BOTH DOMESTIC AND INTERNATIONAL MARKETS.
TO CREATE EFFECTIVE LINKAGES AMONG
WOODCRAFT VILLAGES, IT IS IMPORTANT TO HAVE
THE STATE’S SUBSIDY POLICIES AND PROACTIVE
PARTICIPATION OF CONCERNED PARTIES, AS WELL
AS THE SUCCESSFUL PERFORMANCE AND CLOSE
COOPERATION OF THE VILLAGES THEMSELVES.

INTRODUCTION
Vietnam’s timber processing industry
is enjoying huge opportunities but
facing numerous challenges from the
global integration and FTAs that Vietnam
has recently signed, including TPP and

At the same time, the timber processing

industry, particularly craft villages, is
suffering from many difficulties due to the
shortage of input materials. In addition, it
is rather difficult for local timber processors
to access bank loans, while their key
export markets are narrowed. This leads
to overstock, decreasing output price,
and fewer orders that are more and more
demanding. To raise competitiveness,
increase product quality and improve
workers’ professional skills, it is necessary
to change methods of production and
trading. In other words, this is a good chance
for the local timber processing industry to
build up a closer link and rearrange itself
so as to increase competitiveness and
renew production technology chains, as
well as improving labour management and
personal training activities.
In this bulletin, we discuss how to work
out measures to promote the building of
stronger linkage among woodcraft villages
toward the forming of trade relations
and the exchange of information and
production technology. We also aim to
improve professional skills for workers to
make high-quality products that can meet
increasing demand from overseas markets,
and lift the role of Vietnam’s timber
processing industry to a new height on the

international arena.
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THE
SMALLER
PRODUCTION
SCALE OF WOODCRAFT VILLAGES
Vietnam now has more than 300
woodcraft villages, offering jobs to around
300,000 workers. Among them, few
villages can develop products with high
added value. Most villages use out-of-date
production methods so they fail to meet
the increasing demand of consumers on
the market.
Many timber processing establishments
in Vietnam, including woodcraft villages,
are losing their market share.
In the domestic market, Vietnamese
timber products account for about 40% of
the total trade value, while the remaining
are mostly contributed by high-end
products imported from China and a

number of Southeast Asian nations, such
as Malaysia, Thailand and Singapore.
In the first five months of 2014, Vietnam
imported timber and timber products
worth USD84.3 million in total from China
alone; up 13.93% compared to the same
period last year, according to Goviet.org.
vn, 2015.
Chairman of the Association of Dong
Ky woodcraft village - Vu Quoc Vuong –
admitted that although Dong Ky timber
products are now available in almost all
localities throughout the country, only 20%
of the total revenue of the whole village
(800 – 1,000 billion VND each year) comes
from the local market share.
Moreover,
narrowing
production
scale is happening at the same time with
market share decreasing. Currently, there
are more than 80% of craft villages which
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22

only sell their products on the home
market. A research conducted on over
200 households in four provinces, namely
Hoa Binh, Nghe An, Binh Dinh and Kon

Tum, showed that about 97% of timber
processing households sell their products
on the domestic market (VNGO-FLEGT,
2015).
Some traditional woodcraft villages
sell their products on both domestic and
foreign markets, but they sometimes
have to suspend production due to weak
consumption. These villages include Van
Diem – Thuong Tin, Hanoi, Dong Ky, Phu
Khe, Huong Mac, Tan Bao - Bac Ninh, Quang
Phong. According to statistics by the
Vietnam Craft Villages Association, around
50% of woodcraft villages have to stop
or temporarily suspend their production
(BOX 1).

Box 1: Woodcraft villages in the
central province of Nghe An are reducing
production
The woodcraft villages in Nghe An are
facing many difficulties in market access.
When it was set up in 2002, Quang Phong
woodcraft village in Thai Hoa district, Nghe
An had 186 households. In 2014 the figure
was down to 67, with 143 workers. Similarly,
Tan – Quyet – Thang woodcraft village had
150 households when it was established in
2003. In 2014, the number reduced to 43,
with 150 workers (Source: Hoa Hieu Ward

People’s Committee, 2014)


QUARTER III- IV/2015

Sustainable Rural Development

Woodcraft workshop with small-scale production
in Tan Quyet Thang village- Nghia Dan- Nghe An
Source: Provided by Author

LACK OF LINKAGE AND SMALL–
SCALE PRODUCTION

quality and seek for stable markets to sell
their better goods.

Most woodcraft villages in Vietnam
today still lack close linkages and operate
on a small scale. They make products
based on their experiences and do not pay
due attention to market research. They
lack market information and do not study
consumer tastes (BOX 2). In these villages,
it is hard to identify professional skills of
workers and classify timber processing
households following the criteria of
distribution – production - trading. Most
timber processing households are quite
small, with only 2 – 15 workers who are

usually family members. They often make
a complete product from raw material
to final touch. There’s no real link timber
processing households them. As a result,
they produce in mass without a specific
plan and then find it hard to sell on the
market. Some households launched
unhealthy competition programs such as
lowering the price, dumping prices to seize
more market share. In these cases they
only rush for profit, not to increase product

Many households in woodcraft villages
do not have updated information on
market trends and consumer tastes. They
hardly exchange information because they
want to keep the secret technique of their
traditional craft. This is the main factor
leading to unplanned production and
ineffective business operation.
Box 2: Producing fine art timber in
Binh Dinh province
Most woodcraft villages in Binh Dinh
are on a small production scale, with 2 – 15
workers, and about 74% of them have more
than 2 full-time workers. Approximately
83% of these households are making final
products and sell them on the markets.
More than 64% of the households earn an
annual revenue of about 100 million VND,

while 34% have a revenue of less than 50
million VND/year. Only 10% of them sell
their products at overseas markets.

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LACK OF SUPPORT FROM STATE
AGENCIES AND SOME PROBLEMS
INSIDE THE CRAFT VILLAGES
Woodcraft villages in Vietnam failed to
raise their competitiveness and improve
the effectiveness of production due to the
lack of policy support at national level.
Current policies mostly focus on drafting
the guidelines, not providing detailed
assistant tools or measures for the craft
villages. This is the main reason leading to
ineffective operation of the villages, and
fails to sharpen competitiveness to stand
firmly on the home market, while keeping
a close watch on overseas markets.
It is also difficult for villagers to improve
their skills and get access to bank loans, so

they find it hard to increase productivity
and production capacity. Local survey
showed that there is room for further
training on legal issues, product quality
and professional skills. (BOX 3)
In addition, capacity and production
skills of workers in the local timber
processing industry are still at a low level,
while the productivity in other Southeast
Asian countries is rather high. Another
disadvantage is that local workers do
not have enough good knowledge of
technology, business administration and
marketing. Furthermore, the design and
pattern of locally-made timber products
are still at a lower level in comparison with
other countries in the region.
Apart from lacking support from the
State and relevant agencies, some craft
villages themselves do not take an active
role in developing input material sources
and promoting information exchange.
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Business group discussion in Tan Quyet Thang
woodcraft village- Nghia Dan- Nghe An
Source: Provided by Author

Box 3: Capacity to comply with
regulations on legal timber of craft
villages
The archive of documents on the origin
of timber products does not receive due
attention. Only 16.7% of timber processing
households save documents on the origin
of products; 29.2% of them save documents
on the trading and transporting of the
products. Many households in the villages
do not have proper understanding about
the importance of saving such documents.
Most of them are not provided with
guidelines on the implementation of
regulations on exploiting, transporting,
and trading timber within 12 months. Few
of them have a chance to join training
courses on this issue.

The villages should invest more in
renovating technology and equipment,
while building up a closer link among
themselves, especially in the production
and distribution network. Hence, it is
really difficult to increase production
efficiency and promote the production
and distribution of made-in-Vietnam fine
art timber products.

QUARTER III- IV/2015

STRONG LINKAGES NEEDED FOR
SURVIVAL AND DEVELOPMENT
Obviously, with current obstacles to
woodcraft villages, it is essential to have
State subsidies and attention from relevant
agencies. In particular, households do not
have any links (via professional associations
or cooperatives), so there is no network
formed among these villages, thus causing
unfair competition and dumping prices.
They do not follow regulations on pricefixing and healthy competition in the
integrated market which Vietnam is part
of. If local timber processors do not respect
the law and strictly follow regulations,
there will be huge obstacles for Vietnamese
timber products to penetrate into the
world market.

Sustainable Rural Development

Box 4: Models of linkages in the
timber processing industry
- Creating a closed chain from seed
variety – afforestation – exploiting –
collecting – processing – trading: this
model is not available in Vietnam yet;
Linkages: from seed variety –
afforestation – material collecting: this

model has been operated in Vietnam (For
excample, VIJACHIP company in Danang
in a joint venture with VINAFOR, Vietnam
forestry companies; Nam Dinh Forestry
JSC., Wood Land Company... link with an
afforestation company or a household);
- Linkages: Afforestation – processing
(For example, Dai Thanh company; Truong
Thanh company,... link with afforestation
companies);
- Linkages: Input material purchase
– processing – export (For excample,
PISICO Binh Dinh Corporation, Forestry
Corporation,... link with afforestation
household – timber processing company).
(Souce: Trang and Associates, 2013)

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