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NATIONAL FLEGT STAKEHOLDER ANALYSISFOR VIENAM

Dr. Le Khac Coi Dr. Nguyen Ton Quyen

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CONTENTS

1. Background…………………………………………………………. 52. Objective of the study……………………………………………… 7.3. Methodology of the study………………………………………… ...74. Forest administration system in Vietnam………………………… ...75. Vietnam forest………………………………………………………. 96. New direction for the sector: National Forestry Strategy (NFS)… ..157. FLEGT activities in Vietnam……………………………………… 168. Outcomes of FLEGT stakeholder analysis in Vietnam…………… 169. Recommendations………………………………………………… .29

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ACRONYMS AND ABBREVIATIONS

DARD: Provincial Department of Agriculture and Rural DevelopmentDoF: Department of Forestry of MARD.EC: European Council.EU: Eropean Union.FLEGT: Forest Law Enforcement Governance and Trade.HAWA: Hochiminh City Handicraft and Wood Processing Association.ICD: Interanational Cooperation Department of MARD.LD: Legal Department of MARD.MARD: Ministry of Agriculture and Rural Development.MF: Misnistry of Finance.MIT: Ministry of Industry and Trade.SC: State Customs.VIFORES: Vietnam Forest and Forest Products Association.

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ACKNOWLEDGEMENT

Special thanks belong to to all who are interested in FLEGT issues and providedconstructive response to the questionnaire which, the first time in Vietnam, helped tomake a sketch on FLEGT stakeholders and their FLEGT -related concerns.

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NATIONAL FLEGT STAKEHOLDER ANALYSIS FOR VIENAM

1. Background

Responsibly managed forests are vital for social equity, ecological integrity, andeconomic growth. According to the World Bank’s 2007 report, nearly 60 millionindigenous and another 350 million people live in or near forests, depending on them forsubsistence and income. Forests are home to at least 80 percent of the world’s remainingterrestrial biodiversity, serve as carbon sinks, protect watersheds, and reduce the risk ofnatural disasters such as floods and la ndslides. The forest industry is a source ofeconomic growth and employment, generating $186 billion per year in global trade ofprimary wood products.

Despite the importance of responsibly managed forest resources, nearly half the earth'soriginal forests have been lost and those that remain face a very uncertain future.Deforestation has risen to alarming levels; 10 percent of all forests have disappeared inonly the last 25 years, mainly due to human activity. Irresponsible logging practices andillegal logging continues to plague the sector .On the other hand, it was theoretically proven that there is enough wood in the world'sforests to supply its wood requirements. An analysis carried out by WWF and the WorldBank in 2001 indicated that by responsi bly managing 60 percent of the world’s forests, atdifferent levels of intensity and for different purposes, we could protect the remaining 40percent. Thus many global efforts of governments and non -government organizations inthis direction, based on law and governance enforcement as well as markettransformation initiatives or both, have been witnessed in practice recently.

Illegal logging with its serious environmental and social damage, as well as costinggovernments an estimated $10 billion every year in lost revenues therefore wasrecognized in a G8 Summit in 1998, where measures to tackle illegal logging werediscussed and an ‘Action Programme on Forests’ formally adopted. Subsequently inApril 2002, the European Commission hosted an internationa l workshop to discuss howthe EU could contribute to measures to combat illegal logging. At the World Summit onSustainable Development (WSSD), held in Johannesburg in the same year, the EuropeanCommission set out a strong commitment to combat illegal log ging and the associatedtrade in illegally-harvested timber. The EU published its first Proposal for a FLEGTAction Plan in May 2003. A number of other initiatives, arising from both national andinternational commitments, have also developed in parallel. In particular, three regionalFLEG (Forest Law Enforcement and Governance) processes have been established inSouth East Asia, Africa (AFLEG) and Europe and North Asia (ENAFLEG). Theseprocesses, co-ordinated by the World Bank, have resulted in ministerial commitments toidentify and implement actions to combat illegal logging in each region.

In October 2008, the implementation modalities of the FLEGT licensing schemes forimports of timber into the European Community were adopted with the CommissionRegulation No 1024/2008. One of the cornerstones of the FLEGT Action Plan, are

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Voluntary Partnership Agreements (VPA) with producer countries suffering fromproblems of illegal logging and poor forest governance.

Moves to filter out illegal or suspicious imports from wood products markets in Europe,the United States, Japan and other major consuming countries pose a challenge to thegrowth and reputation of Vietnam’s furniture export industry. Already beset by problemsof inefficiency, low productivity and an unsupportive financial environment, the industrynow faces demands for assurances of the legality and sustainability of its raw materialsupply. Failure to give such assurances will mean lost market access and share.Although the changing market signals have not gone unnoticed in Vietnam, the r esponsehas been slow to unfold. A number of furniture manufacturers and e xporters are takingsteps to develop the systems and capacity needed to verify their sources. Several privateand state forest enterprises are implementing certified forest ma nagement regimes. Andgovernment has launched policy initiatives to strengthen the wood pro cessing industryand develop sustainable domestic sources of timber.

One element of government’s response has been to explore participation in the Eur opeanUnion’s Forest Law Enforcement, Governance and Trade (FLEGT) Action Plan.Preliminary discussions between the Vietnamese gove rnment and the EuropeanCommission (EC) led in 2008 to the creation of a bilateral technical working group toexamine ways of collaborating. A U K consultancy, ProForest, is about to undertake apreliminary assessment of the options for c ooperation and their likely impacts.

In parallel with this official bilateral process, IUCN and others have been providinginformation and raising awareness among stakeholders of the changes in markets, theobjectives of the FLEGT Action Plan, and the options for action. At the request of theMinistry of Agriculture and Rural Development (MARD), the lead agency for FLEGT,IUCN has provided support including two national multi -stakeholder round tables in2008, translation and distribution of relevant documents, and developm ent of a trainingcourse for delivery in 2009–10.

These activities have highlighted several challenges facing FLEGT in Vietnam. One is alack of awareness and understanding of basic concepts, terms and processes. Confusionalso exists over the purpose and scope of the FLEGT Action Plan, and the division ofcosts and responsibilities in any FLEGT-related actions. Another challenge is identifyingand ensuring the participation of all stakeholders, even at this early stage in the dialogue.Involving civil society is crucial, for example, but defining civil society in theVietnamese context is still problematic. Also essential is extending the dialogue beyondcentral agencies and groups to the local and provincial stakeholders who stronglyinfluence forest management and enterprise.

To support Vietnam’s collaboration with the EC, and to guide its own FLEGT supportstrategy, IUCN now proposes to carry out a stakeholder analysis with its key partners.This is intended to provide an overall understanding of th e forest and trade sector inVietnam, its main actors, and their possible interests and objectives in relation to FLEGT.The output of the analysis will be a living document, subject to updating as the FLEGTdialogue evolves and stakeholder inte rests and interactions develop.

2. Objective of the study

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The aim of the stakeholder analysis is to determine the composition and interests ofpotential stakeholders for FLEGT-related actions in Vietnam, in order to form the designand implementation of a FLEGT engagement strategy for MARD, IUCN and other keyactors.

The specific objectives of the analysis are as follows:

• Provide an overall understanding of the forest and wood processing system in Vietnam,and the perspectives of its main stakeholder groups.

• Identify, and assess the interests of, the main stakeholders for FLEGT -related actions.

• Assess current levels and patterns of interaction between the different stakeholders.

• Identify strategies (including processes, mechanisms and support nee ds) for ensuringbalanced and constructive involvement by all stakeholders in consultation and planningfor FLEGT-related actions.

3. Methodology of the study

The analysis of the FLEGT national stakeholders is the very first study of such a kindtherefore the work started with the review of relevant publications and literature availableand then based on the structure of Vietnam forest administration system and economicsystem of forestry, a list of main stakeholders is identified. To understand currentawareness of FLEGT, concerns, interests, expectations, difficulties, requirements,possible ideas and actions concerning FLEGT of the identified stakeholders a survey wasdesigned with questionnaire having 22 questions. Because the time for the analysis isquite constraint, it was agreed that this time the survey questionnaire is mainly be sent tocompanies and associations and some few sent to NGOs and government officials andorganizations at provincial level. The government officials and organizations at centrallevel will be covered by the survey next time , when necesary.

4. Forest Administration System in Vietnam

4.1. State administration structureState administration in Viet Nam is composed of administrative units operating at the central,provincial, district and communal levels. The National Assembly is at the highest level and is theonly body with legislative power. The government, including the prime minister; vice primeministers; ministries and organizations with ministry equivalent authority, is the executive bodyof the National Assembly and the highest organ of state administration.

At the provincial level, the Provincial People’s Council is elected by local people, while the ProvincialPeople’s Committee (PPC) — the executive organ — is composed of members elected fromamong the Provincial People’s Council.

There are similar structures both at the district and communal levels comprising the District People’sCouncil and Committee (DPC), and the Commune People’s Council and Committee (CPC),respectively. However the structure may be changed in the future with the new model where

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District and Commune People Council may no longer will be exist.

4.2. Administration structure in the forestry sector

Law on Forest Protection and Development

The law on Protection and Development of Forest, approved and issued by VietnamNational Assembly, is the highest legal document for forest sector and whole society aswell. The first Law on Forest Protection and Development was promulgated in 1991 (58LCT/HDNN8 dated 19 August 1991) and then revised, updated to become Law number29/2004/QH11 and again promulgated in December 2004 by order Number 25/2004/L -CTN of December 14, 2004.

The law provides for the management, protection, development and use of forests;and forest owners’ rights and obligations, applies to State agencies, do mesticorganizations, households and individuals, overseas Vietna mese as well as foreignorganizations and individuals involved in forest protect ion and development inVietnam and in cases where international agree ments which the Socialist Republic ofVietnam has signed or acceded to contain provisions different from the provisions ofthis Law, the provisions of such international agree ments shall apply.

Minisrty of Agriculture and rural development ( MARD)

In 1995, MARD was established covering the functions and mandates of the MoF, the Ministry ofAgriculture and Food Industry, and the Ministry of Water Resources. With the establishment ofthe new ministry, most of the mandates under the former MoF were placed under the ForestProtection Department (FPD) and the Deapartment of Forestry (DoF), both under MARD (Chart 01).

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Chart 01: Organization structure of Vietnam forestry.

5. Vietnam Forest

5.1. Forest Area

Thanks to the policy and laws as well as efforts of the whole Vietnam society the forest area hasbeen increased continuously from 1991, especially when the first Law on Forest Protection andDevelopment was promulgated and applied in practice together with national programs in forestprotection and forest plantation. The forest area has increased from 11.785 million ha in 2002 upto 12.837 million ha in 2007 (Table 01).

FOREST AREA 2002 2003 2004 2005 2006 2007Total forested area (1000 ha) 11,785 12,095 12,307 12,617 12,874 12,837Natural forests (1000 ha) 9,865 10,005 10,088 10,283 10,410 10,284

The government

National level

Provincial PC

District PC

Commune PC

Provincial level

District level

Commune level

Ministry of Agriculture and Rural Development(MARD)

+ Forest Protection Department+ Department of Forestry.+ Department of Processing and Trading of agro -forestry, Aquatic Products and Salt.

Department of Provincial Agriculture and RuralDevelopment (DARD)

+ Forest Protection Section.+ Forestry Section.+ Provincial Agricultural and Forestr y Extension Center.+ Processing and Trading Agro-forestry, Aquatic Products and Salt.

Section of District Agriculture and RuralDevelopment (SARD)

+ Forest Protection Sub-section.+ Forestry Sub-section.+ District Agricultural and Forestry Extension Center.

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Plantations (1000 ha) 1,920 2,090 2,219 2,334 2,464 2,553Table01: Forest area. Source: MARD of Vietnam

The total forest area has increased up to 12.837 million ha ( Table01) and the forest area in 2007is 9% (Chart 02) higher than the area in 2002 which m eans annual average increase for periodfrom 2002 to 2007 is 211,000 ha.

100%

103%104%

107%109% 109%

94%96%98%

100%102%104%106%108%110%

2002 2003 2004 2005 2006 2007

Forest land area change (%)

Forest land area change (%)

Chart 02: Vietnam forest area change from 2002 to 2007. Source: MARD of Vietnam

And the forest cover reached 38.9% in 2007 while the cover in 2002 was 35.7% ( Chart 03).

Forest cover (%)

35.7%

36.6%

37.3%

38.2%

39.0%

38.9%

34.0% 35.0% 36.0% 37.0% 38.0% 39.0% 40.0%

2002

2003

2004

2005

2006

2007

Forest cover (%)

Chart 03: Vietnam forest cover from 2002 to 2007. Source: MARD of Vietnam

Chart 04 below shows that the natural forest area was increased continuously from 2002 to 2006up to 106% vs 2002 but decreased substantially in 2007 down to 104% vs 2002 because thenatural forest lost 126,000 ha in 2007 (Chart 04).

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100%101%

102%

104%106%

104%

96%

98%

100%

102%

104%

106%

2002 2003 2004 2005 2006 2007

Natural forest area change (%)

Natural forest area change (%)

Chart 04: Natural forest area change Source: MARD of Vietnam

Plantation area increased from 1.920 million ha in 2002 up to 2.553 million ha which is 33%higher (Chart 05).

100% 109% 116% 122% 128% 133%

0%20%40%60%80%

100%120%140%

2002 2003 2004 2005 2006 2007

Plantation area change (%)

Plantation area change (%)

Chart 05: Plantation area change. Source: MARD of Vietnam

Vietnam Government policy to promote use of bare land considerably results in decrease of thebare land area from 7.350 million ha in 2002 down to 5.010 million ha in 2007 (Chart 06)meaning that the bare land area in 2007 counts for 68% of that of 2002 only .

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-

2,000

4,000

6,000

8,000

Bare land, denuded hills (1000 ha)

Bare land, denuded hills (1000 ha)

Bare land, denuded hills (1000ha)

7,350 6,772 6,719 6,412 5,609 5,010

2002 2003 2004 2005 2006 2007

Chart 06: Bare land, denuded hills area change. Source: MARD of Vietnam

5.2. Forest Functions

During the past decade there was more attention on forest inventory and forest planning has beenpaid, with purpose to improve all three main functions of forest which is protection, special -useand production at the same time. This effort resulted in a new forest classific ation aiming to meetboth protection and production requirement. The process of classification lasts for around adecade, and its result reflected the demand and benefit of many groups of people interests.

Conservation and biodiversity concerning groups ask for more forest for protection and special -use purpose while other groups including farmers and forestry business ask for more productionforest. Until 2007 the situation seems that the interest of the groups asking for more forest landserving production purpose won their battle with increasing production forest from 42% in 2006up to 52% in 2007, and special -use forest from 16% down to 14% and protection from 42%decreased down to 34% for the same period ( Chart 07).

Vietnam current forest area classified by functions (%)

34%

14%

52%

Protection (34%) Special-use (14%) Production (52%)

Chart 07: Vietnam current forest area classified by function. Source: MARD of Vietnam

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5.3. Frest Management Owners

Background & Causes

When American war ended (1975) and Vietnam was re -unified (1976) management of allcountry forest was in charge of Ministry of Forestry (MoF) throu gh its system of state forestenterprises of two types which are central and provincial. Those two types of SFEs p layeddominant role in forest management, forest protection, timber harvesting and forest planting.

Unfortunately forest area decreased dram atically with this SFE system which resulted inquestioning its ability to manage forest to meet all forest functions. Along with that the lessonslearnt from agricultural land allocation to farmers which brought Vietnam from country withserious hunger up to a global-lead-rice exporter encouraged mind change in forest and forest landmanagement.

In addition, because forest no longer can supply timber and income from timber selling the SFEsdid not have enough financial resource to maintain their activiti es as before. All the mentionedfacts resulted in the SFE system reform and appearance of new actors in forest management.

Process and outcomes

The first effort to enable new actors for forest management happened in 1994, when the centralgovernment mandated the re-allocation of forest land managed by to households, public andother organizations. The new forest landholders having land use right certificate (Red BookCertificate) for 50 years are legally, some how, equal to SFEs. This process is not a smooth one,but quite an up and down process. However in spite of that the process continued to reach aremarkable output in the area of land re -allocated and list of actors. According to the MARDdata, in 2007 the list consists of eight actors. (please cha rt 08).

Forest, bare land and deneuded hills classified by management owners in 2007

15%

17%

11%0%24%

7%2%

24%

State Enterprise (15%) Protection forest management board (17%)Special-use forest management board (11%) Joint venture (0%)Househould (24%) Cooperatives (7%)Army forces (2%) People's Committee (24%)

Chart 08: Forest, bare land and denuded hills classified by management owners.Source: MARD of Vietnam.

The re-allocation of forest land from SFEs to households and communities, together with otherprograms (661, 327, 135), support from interna tional organizations both GOs and NGOs, andespecially efforts of households and new forest land holders several achievements, especially inre-greening bare land after the long war, additional jobs and income for people .

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5.4. Wood Processing Sector

Wood processing sector of Vietnam has boosted considerably in recent decade (see chart 09),especially garden furniture for export which made Vietnam present on the list of 15 leadingexporters of furniture over the world (FAO).

The value of the exported furniture has increased from USD 1,102 million in 2004 up toestimated value USD 2,779 million in 2008 which is about 2.5 times (please, see chart 10).

100%

282%

100%142%

100%

372%

0%

100%

200%

300%

400%

Vietnam North South

Year 2000Year 2007

Chart 09: Increase of number of wood processing companies. Sourse: VIFORES

100%142%

176%218%

252%

0%50%

100%150%200%250%300%

Year 2004 Year 2005 Year 2006 Year 2007 Year 2008

Chart10: Vietnam furniture export value increase. Source: GSO of Vietnam

However Vietnam to reach the high export value as mentioned, a big volume of timbermaterial must be imprted from different sources of many continents (see chart 11).

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522667

760

1022 1095

0200400600800

10001200

Year 2004 Year 2005 Year 2006 Year 2007 Year 2008

Chart11: Vietnam timber import value. Source: GSO of Vietnam

High value of timber imported into Vietnam means that Vietnam wood processing sector,together with its presence on the list of 15 top furniture exporters, while is not material self -sufficient, has remarkable impact on the forests of countries where the timber imported toVietnam comes from.

Rapid change in wood processing enterprise ownership was witnessed within period 2000– 2007. The number of the state enterprises dcreased sharply from 40% down to 5%while the number of private enterprises rocketedly increased from 57% in 2000 up to93% in 2007 (Chart 12).

40%

57%

3%

5%

93%

2%

0%

50%

100%

2000 2007

State enterprises Private enterprises Joint ventures

Chart 12: Structurre of wood processing enterprises by ownership. Source : VIFORES.

6. New directions for the sector: National Forest Strategy (NFS)

In 2001, MARD approved the National Forest Strategy (NFS) for the period 2001 to 2010,identifying sustainable forest resource management, forest development as key developmentdirections and commitment towards people-centred forestry.

In response, a review of the sector was carried out more recently, and in early 2007, the NFS2006–2020 was promulgated, which stipulates the direction of national forest development withfive programs areas: Sustainable forest management and development (1); Forest protection,

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Biodiversity conservation and environmental services development (2); Forest productsprocessing and trade (3); Research, education, training, and forestry extension (4); Renovationof the forestry sector institutions, policies, planning and monitoring (5).

7. FLEGT Activities in Vietnam

There was a few FLEGT-related activities in Vietnam, mainly focused on raisingawareness of changes in international market concerning legality of timber used inprocessing. Organizations conducting activities in this field include Global Forest andTrade Network Vietnam (GFTN VN) which is a part of the Global Forest and TradeNetwork (GFTN) of WWF, IUCN with two workshops in 2008, Vietnam Forest andForest Products Associaton (VIFORES). Basic information on FLEGT is communicatedto export-furniture manufacturers through workshops or sectorial magazines such as GoViet.

8. Outcomes of FLEGT stakeholder analysis in Vietnam

8.1. Structure of surveyed stakeholders

As mentioned in the methodology of the analysis, this time the survey mainly focused onthe wood processing enterprises, making for -export furniture, in four centers of theindustry including Binh Dinh, Ho Chi Minh City, Binh Duong and Dong Nai. However,the questionnaire also was sent to enterprises located in other provinces to make thesurvey outcome representing, at some level, for whole Vietnamese wood processingenterprises. In addition the questionnaire was sent to some provincial governmentofficials, NGOs, and associations. Questionnaires returned with answers showed thatparticipation in answering questionnaire this time is : government offilcials 7%, NGOs16%, associations 13%, enterprises 64% (Chart 13).

7 %1 6 %

6 4 %

1 3 %

G o ve rn m e n t o rg a n iz a t io n (7 % )N o n -g o ve rn m e n t o rg a n iz a t io n (1 6 % )C o m p a n y (6 4 % )A s s o c ia t io n (1 3 % )

Chart 13: Structure of surveyed stakeholders .

8.2. What is FLEGT?

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63% of all surveyed stakeholders said that FLEGT is a legal instrument to protect forest;FLEGT is a barrier for import of illegal timber and products made from illegal timber toEU market 37%; and FLEGT is a purely business barrier 0% (Char t 14). All which meansthat all surveyed stake holders quite clearly understand the nature of FLEGT.

63%0%

37%

Legal ins trum ent to protec t fores t (63% )

B arrier to prevent wood and wooden produc ts im port to E U m ark et (0% )

B arrier to prevent im port of illegal wood and produc ts from illegal wood to E U m ark et(37% )

Chart 14: What is FLEGT?

8.3. First time heard about FLEGT

It is interesting that nearly one fourt h of the surveyed stakeholders, is firstly heard aboutFLEGT when received the survey questionnaire. Adding stakeholders firstly heard aboutFLEGT within the first six months of 2009, the number of people knowing nothing aboutFLEGT before January 1, 2009 counts for nearly 50% (Chart 15). Compared with th efirst EU FLEGT Action Plan issued in May 2003, it is very clear that information onFLEGT is poorely communicated in Vietnam, even within governance and businesscircle.

12%8%

34%23%

23%

Before 2007 (12% )In 2007 (8% )In 2008 (33% )In f irst 6 months of 2009 (23% )W hen rec eived this survey questionnaire (23% )Chart 15: First time heard about FLEGT

8.4. First source of information about FLEGT

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More than 40% received first information about FLEGT from workshops and sectorialmagazines and news. Only 10% from public media (chart 16). Because not everystakeholder can participate in workshops and access sectorial magazines, to getinformation on FLEGT communicated to wider audience, along with workshops andmagazine channels, it is necessary to use public media more for this FLEGTcommunication.

2 4 %

2 0 %1 0 %1 5 %

8 %

2 3 %

F r o m w o r k s h o p s / s e m i n a r s ( 2 4 % )F r o m p r fe s s i o n a l n e w s / m a g a z i n e s ( 2 0 % )F r o m p u b l i c m e d i a ( 1 0 % )F r o m c o l l e a g u e s / p a r t n e r s ( 1 5 % )F r o m o t h e r s o u r c e s ( 8 % )F r o m t h i s q u e s t i o n n a i r e ( 2 3 % )

Chart 16: First source of information about FLEGT

8.5. Why FLEGT was launched?

63% of the stakeholders answered the FLEGT lauch is product of EU policy in forestprotection. However 5% believe that FLEGT is an EU business barrier to prevent importof timber and timber products to EU market (Chart 17).

17%

63%

12%5% 3%

P ressure of E U's people (17% )

E U's governm ents efforts to protec t fores t and environm ent (62% )

P ressure of NGOs (12% )

E U's governm ents set a barrier to prevent im port of t im ber and produc ts into E U(5% )I do not know the m os t im portant reason (3% )

Chart 17: Why FLEGT was launched?

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8.6. What is the most appropriate response of Vienam?

95% think that Vietnam government shoud proactively approach EU to discuss FLEGTissues (Chart 18). This reflects the fact that stakeholders expect Vienam government toproactively deal with all issues related to FLEGT for their own benefits.

0 %0 % 5 %

9 5 %

D o n o th in g ( 0 % )

W a i t u n ti l E U 's f i r s t o f f i c i a l a p p r o a c h ( 0 % )

W a i t to s e e w h a t o th e r c o u n tr i e s w i ll h a ve a c h ie dw i th F L E G T th e n ta n k e a c ti o n s s te p b y s te p ( 5 % )V ie tn a m g o ve r n m e n t a p p r o a c h E U a c ti c e ly ( 9 5 % )

Chart 18: What is the most appropriate response of Vienam?

8.7. What is the most appropriate response of organizations / enterprises /associations?

The chart 19 below shows 98% agreed with positive actio n icluding requesting thegovernment to approach EU (14%), willing to participate in activities related to FLEGT(28%), proactively suggest activities and solutions (56%). This fact means stakeholdersunderstand the importance of resolving issues related t o FLEGT and they are willing andready to take proactive role in this process.

0 %2 % 1 4 %

2 8 %5 6 %

D o n o th in g .

L e t t h e g o v e r n m e n t t o d o i t s r e s p o n s ib i l i t y ( 2 % ) .

A c t iv e ly r e q u e s t g o v e n e m e n t t o w o r k w it h F L E G T ( 1 4 % ) .

W il l in g t o jo in in a c t iv it ie s r e la te d t o F L E G T ( 2 8 % ) .

A c t iv e ly c o m e u p w it h s u g g e s t io n s / s o u lt io n s c o n c e r n in ga c t iv it ie s w it h F L E G T ( 5 6 % ) .

Chart 19: What is the most appropriate response of organizations / enterprises /associations?

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8.8. Why Vietnam government should approach EU?

Almost three thirds of questioned stakeholders believe that proactively to approach EU isthe best way that Vietnam government can support Vietnamese enterprises in doing woodprocessing and exporting business with EU market (Chart 20). This fact again reflect s theinterest of stakeholders in expecting Vietnam government to response to FLEGT forbenefits of the enterprises of Vietnam wood processing and exporting industry.

20%

4%2%

74%

S how concern on the fores t andenvironm ent protec tion (20% )

B ecause others in the region dothat (4% )

FLE GT will be adopted anywayso partic ipating in this is betterthan doing nothing (2% ).Generate good condit ion forV ietnam tim ber and furnitureexport to E U (74% )

Chart 20: Why Vietnam government should approach EU?

8.9. Impact of FLEGT on Vienam forestry activitie s

The strongest impact of FLEGT is on Vietnam export of timber products to EU market(4.62/5.00), following is competitiveness of Vietnam timber products in EU market(4.60/5.00) (Chart 21) All that reflect the concern of Vienam on negative consequencesof FLEGT on its for-export wood processing industry. However the survey showed thatthe impact of FLEGT on the foresty management sytem scored at 3.30/5.00 meaning thestakeholders think FLEGT does not have any strong impact on this field.

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3.52

3.30

3.55

3.56

3.73

3.68

4.62

4.60

- 2.00 4.00 6.00

1

Competative ability of processedtimber and wooden product inEU market (4.60)Export timber and timberproducts to EU market (4.62).

System of timber processing andtrading (3.68).

Production system in forestplanting, forest development andtimber harvesting (3.73).Forest protection system (3.56).

Professional knowledge and skilsof the government officials (3.55).

Current organization andmanagement system (3.30)

Current laws, policy andinstitutional system (3.52)

Chart 21: Impact of FLEGT on Vienam forestry activities

8.10. Impact of FLEGT on Vienam emterprises

Chart 22 below shows that the biggest concern of enterprises is legality of timber materalinput to production (4.5/5.0), procedure for timber products exported to EU market(4.5/5.0). And the surveyed think that the lowest impavt of FLEGT is on woodprocessing technology and machinery (3.1/5.0).

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4 .5

4 .2

3 .9

3 .3

3 .2

3 .1

3 .7

4 .5

4 .3

3 .9

4 .2

- 2.0 4.0 6.0

1

Co mp a n y n a me a n dc o mp e t ive c a p a c it y (4 .2 ).

Ch a n c e fo r c o mp a n y t oe xp a n d p ro d u c t io n a n db u sin e ss (3 .9 ).

V o lu me a n d va lu e o f t imb e rp ro d u c t s e xp o rt e d t o E U (4 .3 ).

P ro c e d u re o f t imb e rp ro c e sse d a n d t imb e rp ro d u c t s e xp o rt t o E U ma rke t(4 .5 ).P ro d u c t io n c o st (3 .7 ).

M a n a g e me n t a n dd e ve lo p me n t o f t e c h n o lo g ya n d ma c h in e ry (3 .1).

L a b o u r fo rc e o rg a n iza t io na n d ma n a g e me n t (3 .2 ).

P ro d u c t io n o rg a n iza t io n a n dma n a g e me n t (3 .3 ).

Co st o f t imb e r ma t e ria l (3 .9 ).

S u p p ly syst e m o f t imb e rma t e ria l (4 .2 ).

L e g a lit y o f t imb e r ma t e ria l(4 .5 ).

Chart 22: Impact of FLEGT on Vienam emterprises

8.11. Who should take the lead in working with EU on FLEGT?

Dominant number of the surveyed stakeholders (83%) is for MARD leadership inworking with EU for FLEGT because they think the MARD is most appropriate for thework. However 17% have different view which support Misnistry of Industry and Trade(MIT) to be the leader for EU FLEGT from Vietnam side (Chart 23).

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8 3 %

17 % 0 %

M i n i s t r y o fA g r i c u l tu r e a n dR u r a l D e v e l o p m e n t( 8 3 % )M i n i s t r y o f In d u s t r ya n d T r a d e ( 17 % )

M i n i s t r y o f F i n a n c e( S ta te C u s to m s ) ( 0 % )

Chart 23: Who should take the lead in working with EU on FLEGT?

8.12. How to prepare to work with EU FLEGT?

All 7 points mentioned in the questionnaire have score from 4.3 up (5.0 is max) whichmean that all the 7 points are considered as important and they should be paid relevantattention during preparation for working with EU FLEGT (Chart 24).

4 .3

4 .6

4 .7

4 .7

4 .4

4 .3

4 .3

4 .0 4 .5 5 .0

1

L e sso n s fro m o t h e r c o u n t r ie s (4 ,3 )

C o mmu n ic a t io n a n d fe e d b a c ksys t e m b e t w e e n n e g o t ia t io nd e le g a t io n w it h s t a ke h o ld e r g ro u p sa n d g o ve rn me n t (4 ,4 )

G o a l, ro a d ma p , p la n , b u d g e t , t a c t ic so f n e g o t ia t io n (4 ,7 )

C o mp re h e n s ive t e c h n ic a lp re p a ra t io n b e fo re n e g o t ia t io n (4 ,7 )

K n o w le d g e , e xp e r ie n c e a n dn e g o t ia t io n sk i l ls (4 ,6 )

C le a r ro le a n d re sp o n s ib i l i t y (4 ,3 )

S t ru c t u re o f V ie t n a m d e le g a t io n inn e g o t ia t io n (4 ,3 )

Chart 24: How to prepare to work with EU FLEGT?

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8.13. Role of stakeholders in working with EU FLEGT

It is quite surprised that Vietnam Forest and Forest Products Association (VIFORES) hasthe higest score (4.6/5.0), following are government organizations such as ForestProtection Department (FPD), Legal Department (LD) of MARD have the same score at4.4/5.0, then Department of Forestry (DoF), International Cooperation Department (ICD),Department for Processing and Trading Agricultural Products (DPTAP) of MARD,Ministry of Industry and Trade (MIT), Ministry of Finance -State Customs (MF-SC) with4.3/5.5 and Hochiminh City Handicraft and Wood Processing Association ( HAWA) at3.9/5.0. This fact means enterprises as well as othe organizations expect VIFORES toplay higher role in working with EU FLEGT (Chart 25).

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4 . 4

4 . 4

4 . 3

4 . 3

4 . 3

4 . 6

3 . 9

3 . 3

3 . 3

3 . 3

3 . 0

3 . 0

3 . 1

3 . 0

4 . 3

4 . 3

- 5 . 0

1

R e p r e s e n t a t i v e f r o m M i n i s t r y o fF i n a n c e - S t a e C u s t o m s (4 , 3 )

R e p r e s e n t a t i v e f r o m M i n i s t r y o fI n d u s t r y a n d T r a d e (4 , 3 )

D e p a r t m e n t o d A g r i c u l t u r e a n dR u r a l D e v e l o p m e n t o f D o n g N a i(3 , 0 )

D e p a r t m e n t o d A g r i c u l t u r e a n dR u r a l D e v e l o p m e n t o f H C M C (3 , 1)

D e p a r t m e n t o d A g r i c u l t u r e a n dR u r a l D e v e l o p m e n t o f B i n h D u o n g(3 , 0 )

D e p a r t m e n t o d A g r i c u l t u r e a n dR u r a l D e v e l o p m e n t o f B i n h D i n h(3 , 0 )

D o n g N a i W o o d A s s o c i a t i o n (3 , 3 )

B i n h D u o n g W o o d A s s o c i a t i o n(3 , 3 )

B i n h D i n h W o o d A s s o c i a t i o n (3 , 3 )

H o c h i m i n h C i t y H a n d i c r a f t a n dW o o d P r o c e s s i n g A s s o c i a t i o n(H A W A ) (3 , 9 )

V i e t n a m F o r e s t a n d F o r e s tP r o d u c t s A s s o c i a t i o n (V I F O R E S )(4 , 6 )

D e p a r t m e n t f o r P r o c e s s i n g a n dT r a d i n g A g r i c u l t u r a l P r o d u c t s(D P T A P ) o f M A R D , (4 , 3 )

D e p a r t m e n t o f F o r e s t r y o f M A R D(4 , 3 )

I n t e r n a t i o n C o o p e r a t i o nD e p a r t m e n t o f M A R D (4 , 3 )

L a g a l D e p a r t m e n t o f M A R D (4 , 4 )

F o r e s t P r o t e c t i o n D e p a r t m e n t o fM A R D (4 , 4 )

Chart 25: Role of stakeholders in working with EU FLEGT

8.14. Areas FLEGT should cooperate and support Vietnam

FLEGT should cooperate and support Vietnam in improving sustatinable forestmanagement (4.6/5.0); system of policies, laws and institutions in forestry (4.5/5.0);increasing professional knowledge and skills for governmental officials (4.40/5.0);

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improving transparency of information on timber and timber products between Vietnamand other countries (4.4/5.0) (Chart 26).

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4 .6

4 .5

4 .6

4 .4

4 .4

4 .3

4 .3

4 .2

4 .3

4 .0 4 .5 5 .0

1

M o re o p p o rt u n it ie s f o r h u n g e re lim in a t io n a n d p o v e rt yre d u c t io n f o r c o m u n it ie s liv in g ino r c lo s e ly t o f o re s t (4 . 3 ).

M o re o p p o rt u n it ie s f o r c re d it sa n d in v e s t m e n t s f o r V ie t n a m inw o o d p ro c e s s in g f o r e x p o rtin d u s t ry (4 . 2 ). .

S im p lif y e x p o rt p ro c e d u re o ft im b e r p ro d u c t s t o E U m a rk e tw h e n V ie t n a m jo in s E U F L E G T(4 . 3 ).

S e ll m o re t im b e r p ro d u c t s t o E Um a rk e t w h e n V ie t n a m jo in s E UF L E G T (4 . 3 ).

Im p ro v e t ra n s p a re n c y o fin f o rm a t io n b e t w e e n V ie t n a ma n d c o u n t r ie s s u p p ly in g t im b e rm a t e ria l f o r V ie t n a m a n dc o u n t r ie s im p o rt in g t im b e rp ro d u c t s f ro m V ie t n a m (4 . 4 ).

Im p ro v e p ro f e s s io n a l k n o w le d g ea n d s k ills o f g o v e rn m e n t a lo f f ic ia ls c o m p lia n t w it h n e wm a n a g e m e n t s y s t e m re q u e s t e db y s u s t a in a b le f o re s tm a n a g e m e n t a n d E U F L E G T(4 . 4 ).

Im p le m e n t s u s t a in a b le f o re s tm a n a g e m e n t t o w a rd s F S Cf o re s t c e rt if ic a t io n (4 . 6 ).

Im p ro v e s y s t e m o f p o lic ie s , la w s ,in s t it u t io n s in f o re s t ry t o b ec o m p lia n t w it h V ie t n a m f o re s ts t r t e g y 2 0 0 6 - 2 0 2 0 a n dre q u ire m e n t o f E U F L E G T (4 . 5 ).

Im p ro v e m a n a g e m e n t s y s t e m f o rf o re s t , t im b e r t ra d in g , c o n t ro l,m o n it o r in g a n d v e rif y in g t im b e rs o u rc e (4 . 6 ).

Chart 26: Areas FLEGT should cooperate and support Vietnam

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8.15. Areas FLEGT should cooperate and support Vietnam emterprises

The highest score belongs to the request of enterprises for having a clear, transparent,consistent ans simple guideline for timber legality (4.5/5.0); simplified procedure fortimber products export to EU market (4.5/5.0); improvement of management system to becompliant with EU FLEGT requirements (4.5/5.0); and improve enterprisecompetiriveness (4.4/5.0) (Chart 27).

4 .6

4 .2

4 .5

4 .4

4 .2

4 .5

4 .4

3 .5 4 .0 4 .5 5 .0

1

Im p ro v e e n te rp ris e c o m p e t it iv e n e s s(4 .5 ).

S im p lif ie d p ro c e d u re fo r e x p o rt o ft im b e r p ro d u c ts to EU m a rk e t (4 .5 ).

S e ll m o re t im b e r p ro d u c ts to EUm a rk e t (4 .2 ).

G e t n e w a n d m a in ta in c u rre n tc e rt if ic a te s fo r s u s ta in a b m e fo re s tm a n a g e m e n t (F S C F M ) a n d fo rc h a in o f c u s to d y (F S C C o C ) w ithlo w e r c o s t (4 .4 ).

im p ro v e m e n t o f m a n a g e m e n ts y s te m to b e c o m p lia n t w ith EUF L EG T re q u ire m e n ts (4 .5 ).

Im p o rt le g a l t im b e r m a te ria l e n o u g hfo r p ro d u c t io n - fo r- e x p o rtre q u ire m e n t (4 .2 ).

A c le a r, t ra n s p a re n t , c o n s is te n t a n ds im p le g u id e lin e fo r t im b e r le g a lit yfo r e n te rp ris e s (4 .6 ).

Chart 27: Areas FLEGT should cooperate and support Vietnam emte rprises

8.16. When Vienam should start negotiating with EU on FLEGT?

61% of questioned stakeholders think the negotiation should start by end of June 2010which means to start the negotiation soon is dominant position of the surveyedstakeholders. 25% support the start by end of 2009. And 91% are for the start by end ofJune 2011 (Chart 28).

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25%

36%

20%

10%2%2% 5%

Last 6 months of 2009 (25%)

First 6 months of 2010 (36%)

Last 6 months of 2010 (20%)

First 6 months of 2011 (10%)

Year 2012 (2%)

Year 2013 (2%)

Do not know (5%)

Chart 28: When Vienam should start negotiating with EU on FLEGT?

8.17. When VPA should be signed?

36% for finalizing the negotiation and signing VPA by end of 2011. Adding 33% thinkthe process should end by signing VPA end 2012 then 69% expect the VPA to be signedby December end 2012 (Chart 29). Three years to achieve VPA, compared with othercountries negotiation with EU, is not too long. However 16% surve yed stakeholders donot know when the VPA should be signed which means that there is a lot of works to doin FLEGT communication to Vietnam society.

35%

33%

12%

2%2%

16% End 2011 (36%).

End 2012. (33%)

End 2013. (12%)

End 2014.(2%)

End 2015 (2%)

Do not know. (16%)

Chart 29: When VPA should be signed?

9. Recommendations

This survey, first time in Vietnam, provide s a general picture on Vietnam FLEGTstakeholders who really need to be involved, according their own functions; theirinterests and concerns; in FLEGT next coming activities in Vietnam.

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The survey outcomes as well as discussion of selected stakeholder s participated indiscussion at the workshop taken place in HCMC 28 July 2009 resulted in followingrecommendations in four areas.

9.1. Organization, goals, targets, contents, road -map, plan, budget, tactics of Vietnamside for negotiation with EU

1) Vietnam negotiation delegation, including representatives of all stakeholder groups,well organized, led by leader appointed by MARD, should have SMART goals, roadmap,plan, and tactics.

2) Leader and members of the delegation, with clear responsibilitie s and rights, should beexpert from areas who represent and should have appropriate negotiation skills.

3) Technical sub-teams should be formed to prepare for negotiation and to solveproblems arised during negotiation.

4) An appropriate communication s ystem should be established to provide allstakeholders and relevant government organizations with information on negotiationprocess as well as negotiation partial results in order to get feedback of stakeholders andproper guideline from the government.

5) Should clearly understand FLEGT requirements, FLEGT definition of timber legality,illegal timber, methodology and means for verification of legal and illegal timber,conformance and non-conformance of what is being done by Vietnam government andenterprises with FLEGT requirements, and all what requested by FLEGT but Vietnamdoes not have at all.

6) The government should have a budget line for FLEGT in annual governmental budgetand enterprises can contribute some part of this budget line.

7) EU should provide Vietnam with financial contribution for expenditure related toFGLEGT in Vietnam.

8) Lessons learnt in working with EU FLEGT from other countries should be updatedand communicated to all members of the negotiation delegation.

9. 2. FLEGT impacts on Vietnam forestry activities. How Vietnam should response andhow EU should cooperate and support Vietnam

1) FLEGT impacts on laws, policies, institutions, awareness and activities ofgovernmental officials, businessmen, associations in Vietnam forestry therefore it isnecessary to review the laws and policy system as well as institutions to identify areas tobe revised, improved and roadmap for this revision and improvement. This processshould get the highest interest and contributions of all s takeholder groups.

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2) FLEGT also impacts on laws, policies, institutions of countries having timber traderelationships with Vietnam therefore it is necessary to identify all possible non -conformances of laws and policies of those countries to be brought t o contents ofnegoatiation with EU.

3) Should create a clear, transparent legal frame easy for self -aware, self-disciplineenterprises, but very difficult for deceitful one.

4) The licencing system within VPA between Vietnam and EU (to be signed as res ult offruitful negotiation) should not a petition -give system. Monitoring and verifying morethan 2,000 enterprises is not an easy work therefore to ensure correct and transparentlicecing the establishment of this system should be paid by serious attenti on andconsideration. Using third parties as licencing authority can be an option forconsideration.

5) Based on points from 1 to 4 above, Vietnam should Vietnam should make a SMARTaction plan for cooperation with EU concerning FLEGT.

6) FLEGT EU should cooperate with Vietnam according to the action plan, mentioned inpoint 5 above, with expected areas : system of laws, policies, institutions, forestmanagement and development, timber trading, processing and timber products export toEU market, capacity building for government officials and relevant associations.

9. 3 FLEGT impacts on Vietnam wood-processing-for-export enterprises. HowVietnam enterprises should response and how Vietnam gernment and EU shouldsupport Vietnam enterprises

1) Most seriously impacted areas of enterprises are: procedure for timber productsexported to EU market, volume and value of products exported to EU market, brandname and competitiveness of enterprises.

2) Enterprises should pro-actively communicate own interests, concerns, initiatives andsuggestions, proposed solutions related to FLEGT from negotiation preparation stage,and through negotiation process as well.

3) Enterprises should pro-actively organize own material supply system, production andsale system compliant with FLEGT requirement and VPA to be signed upon fruitfulnegotiation.

4) Enterprises should proactively build local base of timber material by cooperation withforest owners, small plantation holders on one hand and Vietnam government shouldsupport this cooperation on the other hnad.

5) Should provide enterprises with with simple, clear, transparent and consistentguideline for timber legality definitiona as well as methodology of verification of timberlegality as requested by FLEGT, in mothe r language.

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6) Should simplify procedure for timber products export to EU market when Vietnamsigns FLEGT VPA with EU.

7) Should support enterprises in g etting new and maintaining current certificates forsustainabme forest management (FSC FM) and for c hain of custody (FSC CoC) withlower cost.

8) Should support enterprises in updating information on FLEGT together with capacitybuilding for contributions during negotiation process and implementation of VPAthrough training courses, information on webs ites; industrial magazines and news.

9. 4: What should associations do to support Vietnam government in joining -FLEGTprocess and support enterprises in doing sustainable business under FLEGTrequirements.

1) VIFORES together with HAWA, Binh Dinh assoc iation, Dong Nai Association, BinhDuong Association should play proactive role in activities related to FLEGT, from thebeginning.

2) VIFORES should be an official member of Vietnam FLEGT -negotiation delegation,representing wood trading and wood proces sing enterprises and other associations fortheir interests and concerns.

3) A information channel (even hot line if necessary) between VIFORES and othe rassociations and enterprises should be established to ensure that all associations andconcerned enterprises are regularly updated of process and partial results of thenegotiation so that they can provide feedback and contributions relevantly.

4) Associations should take the lead in providing information, organizing workshops,traiings on FLEGT for enterprises and other stakeholders.

5) Vietnam government should support associations in all activities related to FLEGT.

6) Enterprises should take responsibility to strengthen associations in all aspects.

Due to time and budget constrain ts this time survey, generally, has not worked with thestakeholders at governmental central level yet. Because those organizations are importantin activities related to FLEGT in Vietnam, an analysis of their role, interests and concernsneeds to be included in next survey.

Analysis of difficulties, interests and concerns and support needs of enterprises andassociations also should be indepth and for wider range to get more detailed picturenecessary for further activities related to FLEGT in Vietnam.