Many companies in the local woodwork industry have halved the volumes of imported timber to minimise their inventories and ease pressure for bank loans.—Illustrative image/file Photo

HA NOI (Biz Hub)— Many companies in the local woodwork industry have halved the volumes of imported timber to minimise their inventories and ease pressure for bank loans.

Due to economic woes, woodwork processors were now importing input materials every quarter or small batches in line with each order instead of importing enough for a whole year's production.

This was stated by Huynh Quang Thanh, chairman of the Binh Duong Wood Processing Association and director of Hiep Long Woodwork Company, while speaking with the Saigon Times Online.

The gloomy situation in the first four months of the year is largely responsible for slowing down the imports.

Many enterprises failed to get bank loans while others who did were charged with high lending rates. This means members in the industry have had to scale down imports of input materials to avoid paying huge interest sums in the current tough business conditions, added Thanh.

He noticed numerous members had slashed material imports by over 50 per cent against the same period last year.

According to the director of a woodwork exporting company in HCM City, interest sums for bank loans alone make up more than 30 per cent of total production costs at his firm.

In fact, owing to difficult business, input material imports of the whole industry have slumped in recent years as processors seek to buy more materials locally, the Viet Nam Timber and Forest Product Association (Vietforest) reports.

For instance, imported processed materials for the woodwork industry from 2005 to 2010 accounted for up to 80-90 per cent of the total. However, this fell to only 66 per cent in 2012.

Latest data from the Ministry of Industry and Trade in the first three months of the year shows that Viet Nam imported more than US$314 million worth of timber and products, a decrease of 5.22 per cent year-on-year.

In March alone, the import value of this kind of product reached $113.2 million, tumbling 14.43 per cent from the same period last year. — VNS