The impact of timber legality regulations on business practices in Vietnam

Reports that nearly half of Vietnam’s roundwood imports come from illegal sources has drawn criticism from major consumer countries who have recently implemented timber legality regulations. These regulations, which include the U.S. Lacey Act and EU Timber Regulation, restrict the import of illegally harvested wood and are expected to have a direct impact on major wood-processing countries such as Vietnam and China. Surveys were conducted at trade shows in Ho Chi Minh City to assess how these regulations influence firms’ use of chain-of-custody certification, and impact their material sourcing and export market decisions. Vietnamese firms which sell to the United States and the European Union had higher awareness of timber legality regulations and were more likely to take steps to eliminate illegal products from their supply chain by sourcing raw materials from the U.S. and Canada or by increasing their use of certified wood. However, smaller firms were generally unaware of timber legality regulations and were much less likely to use certified products. Our findings suggest that the Vietnamese market has become segmented, with smaller firms using materials which are at a higher risk of containing illegal wood, and exporting to less regulated markets, such as China.