1. FOREST PRODUCTION IN BINH DINH TIMBER INDUSTRY IN BINH DINH AND FLEGT – VPA PROCESS Presented by: Vice Chairman FPA – Mr. Le Vy

2. 1. The Current Situation of Processing Timber For Exporting: In 2014, Vietnam exported around $6.23 billion USD worth of timber. Five months into 2015, the level of timber export reached $2.6 billion USD, an increase of 8.6% when compared to the same time period in 2014. In 2014, Binh Dinh exported $313.9 millions USD worth of timber, an increase of 21.4% when compared to 2013. The export of outdoor furniture was valued at $181.336 millions USD, an increase of 4.9%. Furthermore, the export of indoor furnitures saw an increase of 69.8%, where $24.285 million USD worth of indoor furniture was exported. During the first five months of 2015, the timber processing industry in Binh Dinh was valued at $149.95 millions USD. An increase of 23% when compared to the same time in 2014. This accounted for 53% of the total value of the whole province’s exportation, which included: outdoor timber furniture ($96.925 millions USD, an increase of 16.4%) and indoor furnitures valued at $4.3 millions USD.

3. The EU is a major and important market for the timber industry in Binh Dinh province, accounting for 85% of the timber export every year. However, due to the economy of many EU countries, the timber market in Binh Dinh province is at risk due to a number of factors. These include: - The recent decline in the value of the Euro (especially when compared to USD) - The increased debts in public sectors in many EU Figure 1: Top 10 EU market for Vietnamese timber products

4. 2. Difficulties in Implementing (EUTR) and FLEGT-VPA - Increased costs for due diligence according to EUTR when VPA FLEGT is concluded as a legality. It must be ensured in the whole production/supply chain which is long and complicated. These costs include: - Recruitment - Training of staff for Chain of custody ( CoC) - Increased costs for inputs materials - Continuous inspections and monitoring from clients. - High risks are involved as different EU countries have different requirements and languages. Furthermore, they will require different documents and proofs to verify timber, making it difficult to verify profiles and prove timber legality based on the documents available. - Overtime, there are a lot of overlapping and un-unified regulations between central and local governments, (on land, labor, and environment issues etc), thus the legal documents and profiles for timber products may not be accepted by authorities and clients from EU countries.

5. - There may be an increase of inequality within law compliances among businesses that export to EU markets and other markets. - According to licenses: FLEGT will be provided in HN and Ho Chi Minh City. This will be difficult for businesses located in the central and highland areas as it would cost them more time and money. -Branding products with FLEGT licenses issued in Vietnam will cost time and money. - Businesses who already have their own “FLEGT” and/or FSC/ PEFC will find that it is also widely recognized. 2. Difficulties in Implementing (EUTR) and FLEGT-VPA

6. 3. In Compliance With ( EUTR ) and FLEGT - VPA: To minimize risk, timber enterprises in Binh Dinh have done following to be compliant with EUTR: - Use timber from plantations that have clear legal evidence, have FSC, PEFC certificates, and are managed in sustainable ways - Import timbers from low-risks countries such as: U.S., EU, New Zealand, and not from natural forests in high risk countries

7. - Follow the guidance from VNFOREST and the guide from draft LD and TLAS (annexes of VPA). - Cooperation amongst export businesses and consulting companies to conduct frequent monitoring of the supply chain. 3. In Compliance with ( EUTR ) and FLEGT - VPA:

8. - Implementation of management system of FSC FM/COC since 1995. Binh Dinh now have 85 FSC FM - COC / 244 certificates in Vietnam (35%). -Implementation of labor standards, labor safety and environmental standards according to BSCI. - Application of quality control ISO 9001:2008. 3. In Compliance with ( EUTR ) and FLEGT - VPA:

9. - Cooperate with NepCon (Netherlands) to apply the toolkits to ensure timber legality. - Be a member of Global Forest Trade Network (GFTN) of WWF. - Participate in delivering consultation services such as Technology SURE of TFT; OLB from Bureau Veritas… 3. In Compliance with ( EUTR ) and FLEGT - VPA :

10. - Switch from outdoor furniture production to indoor furniture production. - Expand to other non EU markets. - Develop the use of other materials such as; metal, plastic and stone to combine with timber products. 3. In Compliance with ( EUTR ) and FLEGT - VPA :

11. - It should be made easier for businesses to get a FLEGT license by speeding up the process and by reducing the costs and time for them to conduct due diligence. Furthermore, they should increase the competitiveness of timber products in Vietnam to EU markets. - Support timber processing businesses in Binh Dinh to pilot test (TLAS) when it is ready. - Consider establishing a regional office for licensing in processing major hubs like Binh Dinh (export more than 1/3 of the total timber export value of the country to EU markets), to save time and costs for businesses spent getting the licenses. - Consider an alternative offices to provide FLEGT licenses. This is so that if the FLEGT licensing office has been ceased for some reason, it will ensure that export activities will not be affected. 4. Recommendations

12. BINH DINH FOREST PRODUCTION ASSOCIATION THANK YOU !