Developing an Agricultural Research and Development Priority Framework for Vietnam Forestry Sub-Sector Workshop Data and Information Sheets: Areas of Research & Development Opportunity (ARDOs) ARDO Large Timber Production ARDO Pulp and Small Log Products ARDO Bamboo and Rattan ARDO Non Timber Forest Products ARDO Bio-diversity and Conservation ARDO Environment and Services ARDO Forest Policy June 2007 ARDO 1 Large Timber Production ARDO DEFINITION 1.1 National Goal: Enhance the provision of large timber from natural forests and plantations to meet the needs of the wood processing and furniture industries to increase exports and national use of domestically produced timber, and reduce the import of timber 1.2 Research scope: Research to improve productivity and quality of timber from natural and plantation forests; selection of species, tree improvement, planning and sitespecies specification; improvement of silviculture techniques, harvesting, wood treatment and processing techniques and marketing of timber and products of timber; sustainable forest management practices 1.3 Coverage:  Natural forests: native tree species commonly harvested with a focus on less known/less used species  Plantations: Acacia spp (especially focus on A auriculiformis); Eucalyptus spp.; Pinus spp (especially Pinus caribea); indigenous species: Hopea odorata, Dipterocarpus alatus, Parashorea cochinchinensis, Anisoptera spp , Prumus arborea, Canarium spp., Endospermum chinesis, Cinamomum spp., Quercus wallichiana, Melia azedarach INDUSTRY STATISTICS 2.1 Introduction Forests of Vietnam have high potential but inappropriate use and poor management systems have steadily decreased the forest resource Because of incorrect recognition of the content and philosophy of forestry management, many mistakes in the past concerning the policies and conception in development, utilization and sector organization have been made The forestry sector policy has gone from the extreme of harvesting (with the recognition that forest resources are endless) to the other extreme of suspension of the logging (focus only on forest protection and development) The consequences of mistaken in forestry sector are: (i) Yield and productivity of natural forests have decreased gradually and not correlate with their natural potential; (ii) Productivity of plantation forests is low and ineffective; (iii) Forests not meet the demand of processing industries The growth and contribution of the forestry sector to GDP is relatively low and continues to fall as a percentage of GDP In recent years the Forestry sector of Vietnam has experienced: ForestryPriority Workshop Data & Information Sheets  Natural forests being restored (e.g from 1995 to 2005, approximately million restored);  Area of plantations has gradually increased increasing the forest cover from 27.2% in 1990 to 36.7% in 2004  Harvest yield of wood from plantations increased by an estimated 2.5 million m³ per year of which million m³ is from plantations and the remainder from home gardens and scattered planting, providing raw materials for industry, and reducing pressure on natural forests  Wood processing industries and forest products to export are rapidly developing in the recent years, giving an important contribution to export turn over of the country However:  Area, quality and bio-diversity of natural forests is still declining mainly due to conversion of forest to other land uses and unsustainable harvesting practices  Productivity, profit and competition ability is weak  Timber yields from natural forests has decreased from million m³ per year in 1990s to 700,000 m³ per year in 2000s and 300,000 m³ in year 2003 and at present is only 200,000 m³ per year  Plantation forestry does not yet provide the raw material needs of industries and exports  80-90% of wood for production of export products is imported  Wood processing industry although rapidly developing, lacks a long term strategy, is not competitive and suffers from a lack of material resource 2.2 Industry Characteristics and Prospects   Forestry sector has created a lot of employment and enhanced income for millions of people living in and around the forests 2.3 Forestry activities have been transferring from mainly state forestry into social forestry with increasingly participation of non governmental stakeholders Development Targets General Goal to 2020 is to establish, protect, manage and sustainably develop 14.3 million of forest land through participation and mobilization of stakeholders in forestry development and to contribute to social and economic development, environmental conservation; poverty alleviation, and to increase the living standard of communities and people living in and around forests Projected forest and forest land (million ha) Land type 2004 2010 2020 Total area planned as forest land 16,2 16,2 16,2 Permanent state forest area 12,3 14,0 14,3 ForestryPriority Workshop Data & Information Sheets a Protection forest 5,9 5,7 5,7 b Special used forest 1,9 2,3 2,3 c Production forest 4,5 6,0 6,3 Other production forest - - 1,9 Non forested forest land 3,9 2,2 Forest coverage (%) 36,7 43 43 Specific Development Objectives:  4-5% growth of forestry production per year;  Maintain permanent production forest of 2.3-2.4 million of man-made-forests and million of natural forests;  Plant 200 million scatted trees per year  Produce about 20 million m³ of timber per year (of which 10 million m³ is from large timber) and 25-26 million m³ of fuel wood, (meaning 45-46 million m3 in total);  Increase export of forest products to billion US$;  Other forest services reach to billion US$ in the year 2020  More than 30% of production forest areas have been certificated  Create employment for more than million people (including labour in wood processing industries and handicraft);  Increase of income, contribution to poverty alleviation of 70% of poor households in forestry region;  Completion of forest and forest land allocation and tenure to owners before 2010;  Enhancing the knowledge and skills of labour especially for upland farmers and poor groups On an ecological zone basis the development strategy is: (1) Northern mountainous zone:  Sub-zone: North-west (Hồ Bình, Sơn La, Điện Biên, Lai Châu): (i) Establishment and consolidation of protection forest system in Da river watershed; (ii) Establishment of material zone for wood and NTFP processing industries, focus on China market  Sub-zone: North-east (Bắc Cạn, Bắc Giang, Bắc Ninh, Cao Bằng, Hà Giang, Lạng Sơn, Lao Cai, Quảng Ninh, Thái Nguyên, Tuyên Quang, Vĩnh Phú, Yên Bái): (i) Establishment of material zone link to processing industries based on 1.5 million of intensive forest plantation; (ii) Establishing a industrialcommercial zone of forest products in triangle of Hà Nội-Hải Phòng-Quảng Ninh; developing traditional villages of wood based handicraft Strengthening export, focus on China market (iii) Establishment and consolidation of systems of protection and special use forests in the sub-zone (2) Red river delta ForestryPriority Workshop Data & Information Sheets  (Hà Nam, Hà Nội, Hà Tây, Hải Dương, Hải Phịng, Hưng n, Nam Định, Ninh Bình, Thái Bình): (i) Establishment and consolidation of protection forest along the sea and around the big cities, planting of scattered trees; (ii) Development of traditional villages with wood based handicraft; (iii) Consolidation and protection the existing national parks, such as Cúc Phương, Ba Vì, Cát Bà, Xuân Thuỷ (3) North- Central  (Thanh Hố, Nghệ An, Hà Tỉnh, Quảng Bình, Quảng Trị, Thừa Thiên-Huế): (i) Establishment and consolidation of protection forest along the sea, moving sand areas and in watershed; (ii) Consolidation, protection and development of existing national parks like: Pù Mát, Vụ Quang, Bến Én, Bạch Mã, Phong Nha-Kẻ Bàng; (iii) Development of wood and NTFP material zone link to local processing industries (4) Central Coast  (Đà Nẵng, Quảng Nam, Quảng Ngãi, Bình Định, Phú n, Khánh Hịa, Bình Thuận, Ninh Thuận): (i) Concentration on protection forest in watershed and along the sea; (ii) Development of material zone to link with the industrial grove: Chu Lai-Qui Nhơn Đà Nẵng; (iii) Development of arid forest system in Ninh Thuận Bình Thuận (5) Central Highlands  (Kon Tum, Gia Lai, Đak Lak, Đak Nông, Lâm Đồng): (i) Establishment of production zone for proving large timber and consolidation of protection forest in watershed region; (ii) Development of industrial grove Buôn Ma Thuột, Buôn Hồ, Pleiku, An Khê (6) South-east  (Bad Raving Tao, Bin Phước, Bình Dương, Đồng Nai, Hồ Chí Minh city, Tây Ninh): (i) Strengthening forest product processing in the zone and intensive forestation to provide materials for industrial-commercial zone: Hồ Chí Minh city-Biên Hồ-Bình Dương-Vũng Tàu and pulp material industry Tân Mai, Đồng Nai; (ii) Consolidation of protection forest in watershed of important hydroelectric plants like: Trị An, Dầu Tiếng, Thác Mơ; conservation of biodiversity in national parks (7) Mekong river delta  (Long An, Vĩnh Long, Tiền Giang, Bến Tre, Cần Thơ, Hậu Giang, Sóc Trăng, Trà Vinh, An Giang, Bạc Liêu, Đồng Tháp, Cà Mau): (i) Protection, rehabilitation and development of mangrove forest; (ii) planting scattered trees Growing Areas and Yields Up to now,Vietnam has about 2.2 million of planted forests; approximately 59% of which are production forests Distribution of production “man made forest” by areas is as follows (Pham Dinh Tam, 2005): - Northern mountainous zone: 35,325 ForestryPriority Workshop Data & Information Sheets - North- Central: 257,331 Central Coast: 286,178 Central Highlands: 23,468 South-east: 53,182 Others zone: 216.796 The proportion of planted species is: - Pinus spp : 14,82% - Acacia spp.: 15,50% - Eucalyptus spp.: 23,65% - Styrax tonkinensis: 4,34% - Others (lesser than 4%): 41,69% All most production plantations were established for materials and small wood purpose, the percentage of large trees was very low and mostly planted for protection forests Production Average yield of some eatablished plantation: - Acacia plantation: 18-25 m3/ha/a - Eucalyptus camadulensis: 18-20 m3/ha/a - E europhylla: 20-30 m3/ha/a - Pinus merkusii: 15 m3/ha/a - Pinus kesya: 15 m3/ha/a - Styrax tonkinensis: 13,5 m3/ha/a - Manglietia conifera: 11 m3/ha/a Value and Markets Value of wood products and NTFP exports (million US$) Products 1996 1997 19989 1999 2000 2001 2002 2003 2004 2005 Timber 61,0 - 108,0 - 219,0 334,0 435,0 567,0 1034,0 1500,0 NTFPs - - - 78,4 98,3 108,3 138,6 154,7 198,1 87,9* Source: Phan Sinh., Department of Industry and Trade & Statistic, General Department of customers 7/2005 (* Data of the first months of 2005) Comparative Advantage     High Potential of physical conditions (climate, soils) offer higher growth rates of production forests Low labour costs have competitive advantages over other countries Capacity of research and technology transfer institutions is big offering possibilities for Vietnam’s sawmills and wood processing enterprises to improve their competitive abilities Production establishments and households have capacity and willingness to apply new technologies to enhance forest productivity Government Policies The policies which are mostly related to large timber production are:  Land law (review in 2003);  Forest protection and development law (review in 2004); ForestryPriority Workshop Data & Information Sheets  Policies on forest and forest land allocation and tenure;  Decision 178 about Rights and duties of households and individuals with forest allocation  Decision 186/2006/QĐ-TTg dated 14/8/2006 of Prim minister on regulation for forest management Industry Analysis 3.1 Structure Households and Size of Holdings Forest enterprises (wood production):  In the 1960s, almost forests of Vietnam were under the management of state forest enterprises (SFEs) In the early 1990s there were 413 SFEs, of which 138 reported to district Governments, 199 to provincial Governments, the remaining 76 larger SFEs reported directly to central Government These SFEs together controlled 6.3 million of forest land and conducted logging operations on 150,000 each year As a result, they have contributed substantially to the degradation of forest resource By 1996 about half of SFEs had run out of forests to exploit and most were uneconomical and the Government initiated a nationwide program for all SFEs  The changes envision forest management increasingly to be taken over by non government managers and much of land held by SFEs is to be allocated to non government landholders or the rights to use will be contracted out to other users In 1997, commercial logging was suspended in 300 SFEs, according to the Decision 187/1999/QD-TTg from September 1999, and Political Bureau Resolution 28NQ/TW from 16 June 2003 on the arrangement, renovation and development of State Farm and Forest Enterprises,  SFEs are to be reformed into four types of organizations: Forest service enterprise, that support forestation, management and protection activities undertaken by households; Forest exploitation and processing enterprise that are economically profitable; Forest industry groups; Environmental protection enterprises  SFEs continue to manage important stretches of forest land in Vietnam Much of this land is supposed to be contracted out for forest protection or reforestation  At present, only approximately 32% of forests are managed by households; this proportion will be enhanced up to 80% by the year 2020 according to the forestry sector strategy of period: 2006-2020  Most of large timber used for commercial production comes from natural forest, the contribution of plantations on large timber is very low The situation should be improved by intensive investments for the research areas 3.2 Supporting Infrastructure Wood processing industry:  There are approximately 1,200 of wood processing enterprises, of which: ForestryPriority Workshop Data & Information Sheets a State enterprises under MARD occupy10,3% b Joint-venture and 100% foreign funded enterprises, occupy 3, 3% c Enterprises belonging to provinces, occupy 20, 8% d Non state enterprises, occupied 65.6% (No information is available about the contribution of each in terms of volumes produced)  Most enterprises are in the south-east (367); with others being in Red river delta (189); North central (170); Coast central (161); Central highlands (153); Mekong river delta (88) and North West (11)  Most of wood processing establishments have old, underdeveloped technologies mainly using equipment imported from China, East European or domestic made  Machinery is focused on sawmill operations creating semi-finished products, the other operations are mainly handicraft  Some wood processing establishments have had intensive investment to improve technologies and equipment to enhance the quality of products, but as yet this is only on small scale and has little impact on the ability produce a large number of products and to be regionally competitive  The infrastructure development is at a low level and is not yet optimal for suitable flow of raw materials to processing establishments  3.3 Markets  Value added products have gradually become more and more diversified and abundant and the quality of products is improved, step by step towards satisfying the requirements of domestic and export markets  Handicraft products are mostly made of natural forest timber and the use of timber for handicrafts from plantation is still limited  Main markets for wood based products made in Vietnam China, Taiwan, Korea, Japan, European, America, Canada, but these markets are not yet stablised due to low volumes of exports, model and quality and continuity of supply of products is not consistent The commercial promotion of Vietnam wood products through exhibitions and trade fairs and advertisement is limited  Competition for Vietnam’s wood products is likely to increase due to economic globalization especially after WTO membership and this will create constraints, challenges and opportunities for the forestry sector and wood processing industries of Vietnam 3.4 Future Trends and Key Market Issues 2003 Demand (1000 m ) 4.561 2005 2010 5.378 2015 8.030 10.266 2020 11.993 Domestic supply 3.700 10.000 Import 4.300 2.000 Source: National Forestry development strategy period 2006-2020 (4th draft April, 2006) ForestryPriority Workshop Data & Information Sheets R&D Information 4.1 Main Research Areas          Forest sector analysis and forecast the development trends of forest product processing industries and the supply/ demand gaps in the world and in Vietnam Planning and selection priority areas for intensive production of large timber Research to improve policies on forest land allocation/tenure, benefit sharing, financial incentives and other supports to land owners Research to develop system of sustainable harvesting techniques and forest restoration after logging Research to develop silvicultural techniques for reclamation of degraded forest in intensive direction Research to define the main economic tree species providing large timber in each ecological zone Combination of tree improvement with silvicultural measurements to establish intensive large timber plantations Pest/insect and forest fire control Research to enhancing competitive advantages of products made of wood 4.2 Major Research Providers Ministry of Agriculture and Rural Development      Forest Science Institute of Vietnam Forest Inventory and Planning Institute Agriculture Forestry Techniques Research Institute of Tay Nguyen Agriculture Forestry Techniques Research Institute of Northern Mountain Institute of Economic and strategy in Agriculture and Forestry Universities      Forest University of Xuan Mai Agriculture Forestry University of Ho Chi Minh City Central Highland University Agriculture Forestry University of Hue Agriculture Forestry University of Thai nguyen Others Departments of Agriculture and rural development, extension centres… Major donors/International Collaborators:  CIFOR, CSIRO, ACIAR, AusAID, SIDA, IUCN, JICA, TBI, FAO, UNDP, APAFRI, FORESPA 4.3     Funding National budget, Up to now, large timber does not identified as an ARDO in Vietnam, so that no specific figures of total funding for large timber products were available In general, investment for large timber research and production is still low compared with other forestry ARDOs ODA Bilateral co operations others ForestryPriority Workshop Data & Information Sheets 4.4 Major Achievements to Date Research achievements gained up to present that relevant to large timber production are:  Classification of forest land, evaluation of soil potential and the adaptation of tree species and site classification as the basis for forest plantation planning  Determination of essential wood properties as the basis for timber classification for end-use purposes and processing technologies  Scientific background of forest harvesting and forest restoration after logging  Definition of a list of tree species for production forests in different ecologicaleconomic zones (46 tree species)  Creating and improving tree breeds with high productivity and high resistance (Eucalyptus spp and Acacia spp.)  Silvicultural techniques for intensive forest management  Processing technologies of wood from plantations  Wood treatment technologies  Many technical guidelines, regulations, standards have been delivered from the research results and applied effectively in practice 4.5  Impacts of research on the sector and national economy Around 70% of production forest areas are poor forests and new restored forest with production stock of 30-90m3/ha; Productivity of natural forest (annual increment) is estimated to be 3-5 m3/ha/year and productivity of man-made-forest 9-12 m3/ha/year Research could contribute to improve at least 3-4 million of production forest up to the average production stock of 300 m3/ha with a productivity of 10-15 m3/ha/year in 2020 and to enhance the supply capacity of the production forest towards 30-45 million m3 of wood (at least 50% of which are large timber, meaning ca.15-20 million m3/year) meeting the demand at that time  Research could also contribute to increase the productivity of man-made-forest up to the average of 18-20 m3/ha/year; 40% of which could be large timber  The replacement and improvement of forest productivity will improve the sustainability of supply of materials for wood processing industries as well as to improve the environmental and social services of the forests It will also encourage the development of forest product processing industries for domestic use and export, increasing the contribution of forestry sector to GDP, creating job opportunities for upland people and communities 4.1 Time frame: - Expected time to achieve research results: 15-20 years - Scope of application of research results is large  SWOT Analysis Strengths   Physical conditions (climate, soils), biodiversity offer a high development potential Improved policies create a good legal ForestryPriority Workshop Weaknesses   Production rotations are long (especially to produce large timber) and there is a long time to wait between initial investment and income Areas of forestry are topographically diverse Data & Information Sheets 57 management of greenhouse gas emissions and in the quality of air It is expected that global warming will give rise to an increase in extreme climatic events Extremely heavy rainfall events are likely to exceed the ability of poorly managed watersheds to absorb or slow down the runoff of water, leading to increased frequency of severe flooding which is likely to have significant downstream impacts, including loss of property and life Poorly managed protection forests will also impact biodiversity and lead to a reduction in income generating activities, such as selective harvesting of wood, collection of fuel wood and development and exploitation of NTFP This will have major impacts on the livelihoods of forest dwelling households While the range of impacts are clear, there is little information on the scale or value of the protection function of forests In addition most of the value of protection is in the form of savings in the future, rather than immediate financial benefits For that reason there is a need to undertake research to estimate the potential value of protection forests and to highlight the cost effectiveness of forest environmental enhancement and implementation of sound protection policies and measures 2.2 State of environment protection and forest environment services: Forest management and development for environment protection and forest environment services are of concern to the forestry sector as evidenced by the government investment in implementing the national millions hectare reforestation project and the newly revised forest protection and development law 2004 Total area of existing protection forests (Table 1) is about 6.2 millions (in which natural forest area is 5.3 millions ha) However there is still the adequacy in defining and recording statistical data on protection forests Therefore MARD has issued the criteria for classification of protection forests and its area is being checked nation wide Table 1: State of forest types area (MARD, 2005) Category Area (ha) by forest types Special use Protection Production Total 1.929.304 6.199.682 4.487.714 Natural forest 1.849.049 5.328.450 3.105.674 80.255 871.232 1.382.040 Plantation forest According to forestry planning to 2010 and 2020, the national protection forest area is millions (Draft National forestry strategy, 2006) Although there is an increase in protection forest areas, the structure and quality of protection forests not meet the requirements of protection, particularly watershed and coastline protection forests In addition appropriate policies are lacking and ineffective management system of protection forests is widespread The conflicts between exploiting short-term benefits of fisheries resources and forest protection remain considerable challenges in some localities Forest environment services provides ecological advice and services to relevant ForestryPriority Workshop Data & Information Sheets 58 production sectors, communities and society The impact of these services is relatively low as there is little understanding of the value, role and benefits of forest protection and there are no policies and mechanism for managing and utilizing forest environmental services Value Values of forest environment goods and services are stated in the forest protection and development law 2004, particularly Article 33 Presently MARD is formulating a Decree on forest valuation in which environment goods and services are considered the important products of forestry sector to national economy To date, there is no systematic research on value of environment goods and services provided by different forest types in Vietnam However, few researches indicated that the values of forest environment goods and services are much higher than timber value and are not the same for all kinds of forests Such values depend on location, quality and forest types It is estimated that value of forest environment goods and services occupy 85 – 95 percent of its total value The main values of environment good and service are protection of watershed and coastline, carbon storage and sequestration, bio-diversity conservation and landscape beauty for recreation Government Policies The government and MARD have formulated a number of laws, strategies and policies relating to environment protection and forest environment services, particularly forestry sector, as the base to foster research and development in such fields These include:  Environment protection law 2005;  Forest protection and development protection law 2004;  Forestry development strategy to 2010;  Draft national forestry strategy for period of 2006 -2020;  Draft forestry research strategy for period of 2006 – 2020; INDUSTRY ANALYSIS 3.1 Structure Protection forest covers an area of 6.2 millions ha, of which about 5.3 millions is natural forests and the remaining of 0.9 million is planted forests Protection forests are divided into several kinds that are watershed protection, coastline protection, sand moving prevention and environment protection About 75 percent of protection forests are watershed protection forests The forests are mainly owned and managed by the government through forests management boards, enterprises and communities A part from state management, the forests are also contracted to households for protection The area of special use forests is about millions ha, of which about 1.8 millions is natural forests The special use forests are state owned forests and are set up through national parks and nature reserves, focusing on biodiversity conservation Similar to protection forests, some areas of special use forests are also contracted to households for protection ForestryPriority Workshop Data & Information Sheets 59 The management and utilization of protection and special use forests are regulated by a number of regulations issued by MARD and the government However, the uses of those forests are seen very limited as the forests are mainly put into protection As consequences, about 20 million s people living in the forest areas are facing with poverty Like many other countries, environmental goods and services are not fully understood and evaluated because such goods and services mostly have no market, particularly people think that they are kind of “public goods and services” In Vietnam, the role of forests in environment protection is recorgnized in the Forest Protection and Development Law 2004 Although most people agree that forests contribute highly to mitigation of flood control through watershed protection and global warming as well as biodiversity conservation, there is no mechanism for forest owners for such benefits provided by the forests, particularly protection and special use forests The main beneficiaries of those environmental goods and services are domenstic and international societies, for example, mitigation of global warming through carbon storage and sequestration by the forests management and rehabilitation Therefore the detailed and quantative research on values of environmental goods and sevices provided by the forests will be strong base to formulate policies and institutions for sustainable management of forests resources R & D INFORMATION 4.1 Main Research Areas Forest environment area:  Selection of tree species composition and planting measures ;  Agro-forestry and silvo-fishery;  Environment impact assessment of forests;  Institutions and policies concerning forest management;  Economic and technical norms development; Forest environment services:  Economic valuation of environmental goods and services (soil erosion prevention, biodiversity conservation, landscape beauty values) of some forest types;  Clean Mechanism Development – CDM in forestry (afforestation and reforestation) 4.2 Major Research Providers  Research institutions (Forest Science Institute of Vietnam – FSIV, Forest Inventory and Planning Institute – FIPI, etc);  Universities (Vietnam Forestry University - VFU, Thai Nguyen Agro-forestry university, Thu Duc Agro-forestry university, Irrigation University, National Economic University, etc.)  Extension organization/agencies (National agro-forestry extension centre, etc)  International organizations: International Institute for Environment and Development – IIED, Centre for International Forestry Research - CIFOR; Newcastle University of UK, World Agroforestry Centre – ICRAF There are ForestryPriority Workshop Data & Information Sheets 60 good opportunities for domestic cooperation (cooperation between research institutions: FSIV, VFU, Geographical institute; national economic university) and for international cooperation (CIFOR, ICRAF, IIED, China state forestry administration)  Research equipment and tools for environment research and impact assessment, GIS and remote sensing technology as well as laboratory are available and located in relevant research institutions  Research staff are trained and have experiences in the fields of environment research; however the staff for field of forest environment services are being trained and developed 4.3 Funding  Domestic funders: MARD, Ministry of Natural Resources and Environment – MONRE Ministry of Science and Technology – MOST;  International funders: GEF, WWF; IIED, ICRAF; 4.4 Major R & D achievements to date Forest environment area:  Preliminary results on tree species selection and planting measures for protection forests and environment impacts;  Agro-forestry and silvo-fishery models;  Economic and technical norms for development of protection forests; Forest environment services:  Preliminary results on economic valuation of soil erosion protection, water regulation, carbon storage and sequestration, landscape beauty, biodiversity conservation values of some forest types;  Scientific base for formulation of Decree on forest valuation; ForestryPriority Workshop Data & Information Sheets 61 SWOT ANALYSIS     Strengths Increasing recognition at the political level of the value of protection forests Relatively large area of strategically located protected forests Initial policies and projects supported farmers in forest protection and development; For protection forests the state has invested and promulgated benefiting policies to encourage farmers and communities to become involved in forest protection               Opportunities Potential for development of forest environment services for relevant stakeholders (hydro-power plant, ecotourism, bio-diversity conservation; Development of more suitable policies that will meet the needs of local people and encourage their involvement in forest protection Improve models (species, silviculture, agroforestry and silvo-fishery) focused on meeting combined short-term economic and longer-term forest protection goals Define scientific and realistic baselines and strategies for development of protection forests and suitable land use models/patterns; Develop estimates of the intrinsic value of forest protection Raise awareness for managers, planners and policy makers with regards to forest environment services; Improve understanding and technical transfer for the farmers to establish protection forests and sustainable and profitable land uses ForestryPriority Workshop    Weaknesses In adequate understanding on values of forest environment goods and services; The products are more social benefits and such are not attractive to farmers; The demand for short-term economic development and poverty alleviation works against forest protection and management for environment protection purpose; Poor Socio-economic conditions in the coastal and mountainous areas restricts the implementation of relevant policies; Little linkage and cooperation between agriculture, fisheries and forestry sectors with competition for land resources Government policies provide little motivation for attractiveness for the farmer implementation Although forest protectors are permitted to harvest timbers, fuel-wood, NTFPS, etc but due to difficult transportation and access there seem to be no market for such products Threats Competition between agriculture, fisheries and forestry for land The changeable weather events, particularly extreme rainfall affects protection function of forests; Fire and other natural disasters Data & Information Sheets 62 ARDO Forest Policy ARDO DEFINITION 1.1 National Goal Review and revise policies and strategies on forestry in order to create a legal framework and operational environment favorable for implementing the targets of the Forest Development Strategy for the period of 2006- 2020 1.2 Research Scope Analysis of the impact of existing status of the forest policy and strategies and institutional systems; identification of factors working for and against implementation of the Forest Development Strategy and development of policy advice to improve the environment for forestry stakeholders enabling them to meet the development objectives Includes forest statistics, analysis planning and monitoring and evaluation of impact of forest policy 1.3 Coverage Research into policies on: Forest classification; land allocation and rights to use forest land and forest products; forest management systems, investment and credit, exploitation, utilisation, environmental protection and conservation, market development and information; State Owned Forest Enterprises and role, function and management of forestry agents and institutions POLICY OVERVIEW 2.1 Introduction Since the origin of the Law on Forest protection and Development in 1991, the State has promulgated more than 100 legal documents relating to forest policy and legislation such as allocation, leasing, contracting of forests and forest land, investment, credit, exploitation, forest use, processing, consumption and circulation of forest products, forest beneficiaries, forest–related taxes Practices over the past years showed that clear policies backed by legal documents has created a more favorable legal framework and operational environment for attracting greater organization, household and individual participation in management, protection and development of the forests This has led to a stronger development and growth of forestry economy, improved employment and increased income and has assisted in the development of socio-economic activities in the hilly and mountainous areas However, some of the policies developed have not had the desired impact on forest development and the National Forest Development Strategy for the period of 20062020 states that the Forest Sector will strategically shift from State to people’s managed forestry (social forestry) in a sustainable manner and at the same time, contribute more positively to the process of economic growth, poverty reduction and hunger eradication and environmental protection Given this changed strategy there is an urgent need to study and analyse the impact of existing forest policies and to provide advice on development of new and alternative policies that will both enable greater people’s participation and benefits from forestry operations and meet the government’s ForestryPriority Workshop Data & Information Sheets 63 development targets 2.2 Current Policy and Legislation Forest Classification  According to the Forest Protection and Development Law in 2004, the forest is classified into forest types i.e Protection forest, Special-use forest and Production forest The Government has promulgated policies as well as measures for management of respective types of forest Allocation and leasing of forest land and forests use According to the current laws, there are two Laws which regulate forests and forest land  The Land Law clearly stipulates that land belongs to the entire people’s ownership and uniformly managed by the State The State issues the land use rights to different organizations, households and individuals through land allocation or leasing Allocated households and individuals have the rights to change, transfer, lease, inherit, mortgage and share capital with the value of the land use rights  The Forest Protection and Development Law stipulates that the State allocates the Special-use forests to the Special-use forest Management Boards and the protection forests to Protection Forest Management Boards, economic organizations, households and individuals living or working in that area to manage, protect and develop the forests The State allocates Production forests, without collecting fees for use of the forests, to households and individuals who are living there and directly engaging in agricultural and forestry activities The State also allocates Production forests, with collection of forest use fees, to different commercial forestry organizations Legal documents also state that the State leases the Protection forests and Special use forests as landscape, protection areas to different economic organizations; leases production forests to economic organizations, households and individuals in the country; allocates forests to village for long-term use and management etc Forest and forest land contracting  Decree No 01/CP (1995) by the Government on allocation of agricultural and forest land stipulate that Special-use Forest Management Boards, Protection Forest Management Boards and State forestry enterprises, are entitled to contract forest land Eligibile contracts include contracting forest land to households and individuals for protection, regeneration and planting Forest but not to other organisations for logging Contracting duration for Protection forest and Special-use forest is 50 years while duration for Production forest depends on a business cycle of each individual tree species  Decree 135/CP (2005) by the Government on forest contracting has replaced Decree 01/CP and stipulated that the production forest follows specific guidelines and the business cycle, but not exceeding 50 years  Decision 661/TTg (1998) by the Prime Minister stipulated the limit of contracts payments by government: Contracts for protection of Special-use forest and ForestryPriority Workshop Data & Information Sheets 64 protection forest is 50,000 Dong/ha/year, for a maximum of years Contracts for natural regeneration promotion combined with additional planting of industrial trees, fruit trees, special product trees is 50.000 Dong/ha/year, for a maximum of years Contracts for natural regeneration promotion combined with planting of forest trees is 1,000,000 Dong/ha for Special-use forest and Protection forest, for a maximum of years Cost norm for planting of new protection forest is 4,000,000 Dong/ha (planting and tending for the first three years) Investment and credit  For Special-use and Protection forests: According to current regulations, the State provides National budget to invest to the activities of forest protection, for promotion of natural forest regeneration, establishment of Special-use forest and Protection forest However, National budget used for investment to forestry activities is limited and not meeting the requirements Most of the focus for implementation is in mountainous and difficult socio-economic areas (List B), and in especially difficult socio-economic areas (List C) regulated by Investment Law (2005) and these activities are given preferential treatment  For production and processing o Investment policy: Investment Law stated that investment activities for establishment of production forests and processing of forest products are ranked in the List A – Incentive industries and areas Incentives include both forest establishment and forest product processing activities Incentives include exemption and reduction of land rental tax, land use tax, and income tax incentives for enterprises o Credit policy: There are two kinds of credits relating to forestry i.e incentive credit of the State and commercial credit - Incentive credit of the State: In the Central Highlands, in mountainous and remote areas for plantation forests to supply of raw materials for making paper, pulp, artificial board, establishment of concentrated raw material forests, industrial trees and forest product processing units Loans for maximum of 10 years at 70% of the medium-term and longterm lending interest rate of State commercial banks (interest rate in 2004 is 6.6%/year ,interest rate in 2006 is 8-9%/year) For investment projects in the areas where of especially difficult socio-economic conditions, loans will not exceed 70% of total approved investment capital There is a regime for supporting interest rates after investment, investment credit guarantee for forest plantation and forest product processing activities - Commercial credit: For households involved in forestry production activities, the State commercial banks loans up to 10 million Dong Households involved in farm forestry loans up to 20 million Dong No security is required but borrowers have to submit their land use right certificates with loan application forms or certificates of the Commune ForestryPriority Workshop Data & Information Sheets 65 People’s Committees regarding their on-going land use without land conflicts  Scientific and Technology Development: Scientific and technological policy focuses on research programs: (1) Program on sustainable forest management (2) Program on forest protection, biodiversity and development of environmental services (3) Program on timber processing and forest products trading.;(4) Program on research, education, training and forest extension; (5) Program on renovation of institution, policy, planning and monitoring There is no legal document that clearly supports research and technology development priorities  Exploitation, utilization and benefits from the forests o For natural forests used for production, forest owners are allowed to log up to 30% of trees and up to 60% for bamboo forests o In protection forests forest owners can only collect dead and dry trees, fell and broken trees, top-cut trees o Protection forests as the forests zoned for natural regeneration cutting density of less than 30% is allowed o Protection forests as the production forests invested by the State, less than 20% of total growing stock can be harvested o Protection forests invested by the forest owners are permitted to log volume not exceeding 10% of total mature forest area each year o Protection forests of bamboo, it is allowed to cut the maximum volume of 30% o Beneficial policy: Decision No 178/2001/QD-TTg dated 12/01/2001 of the Prime Minister and other legal documents regulate on the beneficial rights of households and individuals to be allocated with forests and forest land, depending on the status of the allocated forest land, contracted forests, capital sources and labour they spent at the time of allocation and contracting work  Market Market policy deals with procedures of transport of timber exploited from natural forests, plantation forests of organizations and individuals; regulations on banning of export and import of rare and valuable animal and plant species for commercial purposes; permitted for import and export of rare and valuable animal and plant species originated from artificial rearing, breeding and reproduction for commercial purposes Other legal documents also regulate that timber products permitted for exported as fine arts made from the timber of natural forests, products produced with artificial boards or timber products from the plantation forests and imported timber, enterprises are permitted to export wood-based products made of timber from plantation forests Tools for export taxes and import taxes are used for adjustment and management of forest products markets  Organization and legislation Existing current legal documents mention the legal framework for arrangement, renovation and development of the State-Owned Forest Enterprises (SAFE), clear assignment of management of business and production activities and State management on forestry Also tax policy, fixed farming and resettlement policy and policy on mountainous socio-economic development ForestryPriority Workshop Data & Information Sheets 66  Policy Environment Much of the current forest policy was developed in an era of state management of forest and forest processing The future policy will need to change to address the changed environment which reflects: Shift from State forestry into people’s forestry (social forestry); Step by step mange the forest resources according to sustainable principles Development of a comprehensive forest sector; Raise the effectiveness and competitiveness in forest production activities and services  The National Forest Development Strategy for the period of 2006-2020 describes the general objectives towards the year 2020 as: o o development and use of 16.2 million of forests and forest land, of which the sustainable forested area is 14.3 million o environmental and ecological protection, o biodiversity conservation and provision of environmental services o  sustainable management, protection, Contribute to improving the living standards of the rural and mountainous areas : Economic Objectives by 2020 include o o Plantation forestry of 2.4 to 2.6 million and million of natural forest to provide raw material for industry o  Growth of forest sector production (including forest product processing industry and environmental services) of to 5% per year Production of 22 million m³ of timber per year and export turnover of forest products valued about billion USD Social Objectives include: o Create jobs for million laborers; o o contribute to hunger eradication and poverty reduction for 70% of the poor households in the important forestry zones; o  increase incomes; improve livelihood of the people involved in forest professional activities Environmental Objectives include: o Raise the forest coverage to 48%; o Plan and effectively mange million of Protection forests o Plan and effectively manage 2.3 million of Special use forest; o Add value to forest environment; ForestryPriority Workshop Data & Information Sheets 67 o Evaluate environmental services and build a mechanism for payment to environmental services from 2007 in order to re-invest to forest management, protection and development Key Issues Allocation and leasing of forest land and forests use  Criteria for land allocation often places poor households at a disadvantage Land allocation limits depend on the capacity of production (labour, capital and management skills) of each household In some localities, poor households have less allocated land area than other households  Lack of guidelines on land allocation Under the Law, households and individuals can receive forest land under natural forests or plantation forests, but, most of the provinces presently only allocate barren land or poor forest to households and individuals  Little poor household access to Special-use forest and Protection forest areas Most poor people live in mountainous areas and when the forest and forest land allocation policy is implemented, national parks, nature reserves and important protection forest areas have been established and allocated to the State-owned organizations This regulation has led to a situation that the poor people living inside and near the forests have lost a main income sources for their families and less opportunities to access to management and use of natural resources Although, the State has stipulated that the forest land users have rights, but, due to absence of detailed guidelines in reality people have little chance to enjoy these rights  Conversion of forest lands to use for other purposes Stipulations by the State on conversion of purpose of land use and forest use have created a new potential for changing economic structure and raising the efficiency of land and forest use Because efficiency of aforestation activities is low, forest land, especially production forest land, is most often converted to other purposes of use, this can spoil the planning of raw material areas Contracts for Conservation and Protection  Contract values for forest protection contracting are low and not attracting many contracts for forest protection, while creating the dependence of the people on the subsidy of the State Incomes from forest protection contracting are not of significant compared with other income sources of the households receiving contracts Credit  Procedures for borrowing incentive credit are complicated such as project document must be prepared, financial plan must be clear, business plan must be justified as profitable Households and individuals find it very difficult to access to this credit sources  In some areas people can access incentive credits, but the time for paying back principle and interests is too short and cannot be met This has created difficulties for the forest growers ForestryPriority Workshop Data & Information Sheets 68  Credit terms are fixed and often not match forest harvesting cycles and this also creates problems for borrowers  Common incentive interest rates not recognise the long term nature of forest production and forest product processing systems compared with other enterprises  Generally, due to high interest rates, very few organizations, households and individuals borrow money for the purpose of forest activities Scientific and Technology Development:  Priorities are not clear or reflect changed environment for forest and forest industry development in Vietnam Rural Development Policies  Integration of forest policies into overall policies for rural development and linking technical expertise to policy analysis expertise is a key to address ForestryPriority Workshop Data & Information Sheets 69 R&D Information 5.1 Main Research Areas  Allocation and leasing of forest land and forests use  Forest and forest land contracting  Benefit sharing 5.2 Major Research Providers Ministry of Agriculture and Rural Development  Forest Science Institute,  Forest Inventory and Planning Institute  Institute for Policy and Strategy for Agriculture and Rural Development Universities  Forestry University, Others  Forest Science Association, ,  Forest Product Processing Association,  Provincial Departments of Agricultural and Rural development,  Sub-Departments of Forestry,  Forestry enterprises and Forest Management Board  Department of Legislation,  Department of Forestry,  Department of Forest Protection 5.3 Funding  Lack of fund for studies in this ARDO  Main financial sources: State budget; International Project, Enterprises ForestryPriority Workshop Data & Information Sheets 70 SWOT Analysis Strengths       Experience in forest policy formulation has shown positive results Without sound policies and assessment of policy impact on key stakeholders the environment for improvement of the forestry sector through application of technologies for economic, environmental and social benefits will be more difficult Forestry policies and legislations are being added, completed and creating a favorable legal framework for the forestry renovation process Policy for allocation of forests and forest land for a long-term and sustainable use to the farmers, policy on support to investment and credit, policy on beneficiaries from the forest, all have created a new driving force for promotion of economic development and effective use of forests and forest land The State, society as well as international community are more concerned about forest protection and development Vietnam’s obligations to international treaties and agreements require attention to sustainable and environmentally sound forest rehabilitation and management practices Weaknesses                  Opportunities  Forest policy framework that is integrated into ForestryPriority Workshop Current policies and strategies not adequately match the changed environment for development of the forestry sector Forestry policy system is not synchronized and lack of stability, still subsidized, not appropriate to the program of socialization of forestry activities and market economy Lack of legal documents relating to institutionalization of allocation of natural forests to households, individuals and communities Lack of legal documents on institutionalization of the rights of the land users, forest users as households and individuals Policy on credit lending is not suitable with forestry characteristics, people cannot access to this capital sources Unclear in the policy on the right of ownership and the right to use natural forests Policy on beneficiary from the forests is unclear and insufficient Institutionalize slowly the rights to use the forests and forestland No concrete institutions for transferring, leasing, bidding, auction of different types of forests Slowly work out proper and strict policies for adjusting the land sources of the forest enterprises Policy on forest and forest land contracting is not attractive to the people to sign contracts, making people dependent on subsidized sources from the State Insufficient policy on encouraging the households, individuals and local communities involved in production, processing, trading and marketing of forest products Insufficient policy on linkage between production of raw materials and processing and consumption of forest products Lack of policy on forest product market Relatively poor linkages between forest policy and rural development policy formulation Backward forest processing industry, processed products have low competitive advantages Law enforcement in forestry is very weak Challenges  Contradiction between policy on conservation Data & Information Sheets 71     a rural development policy framework to address the key weaknesses of forest policy Development of skills to assess the impact of forest policy on key stakeholders including the poor in remote areas, management of natural, protected and special use forests, plantation and farm forestry and the forest processing industries There are domestic and international forest products markets and necessary conditions for forest development Policy on international economic integration has provided an opportunity for improvement of investment environment, penetrating into international forest products markets, receiving technologies and financial investment for expanding raw material areas and modernization of forest product processing units and creating products of high competitiveness The forest sector is implementing important changes from State forestry to social forestry and step by step managing the forests on sustainable basis, creating opportunities for policy renovation ForestryPriority Workshop      and development Policy on conservation has led to the situation hat the people live inside and near the forests have less opportunities to access to management and use of forest resources and as a result, are creating pressure on the forest Conduct allocation of forest and forestlands on the average basis that has made the land sources to become fragmented and go against the requirements of large-scale production of commodities Inadequate investment capital causes difficulties to formulation of investment policy Forest trees have a long-term business cycle, of high risks, efficiency of investment to forest establishment is low, forest activities implemented in remote areas where infrastructures are less developed Competitiveness will be more increased when Vietnam accedes to AFTA, WTO Poverty, quick growth of population in mountainous areas, presently pressing on the forests Data & Information Sheets ... households in forestry region;  Completion of forest and forest land allocation and tenure to owners before 2010;  Enhancing the knowledge and skills of labour especially for upland farmers and poor... around forests Projected forest and forest land (million ha) Land type 2004 2010 2020 Total area planned as forest land 16,2 16,2 16,2 Permanent state forest area 12,3 14,0 14,3 ForestryPriority...  Land law (review in 2003);  Forest protection and development law (review in 2004); ForestryPriority Workshop Data & Information Sheets  Policies on forest and forest land allocation and