Collabor
ation for Agriculture and Rural Development
(CARD)
Program
250
DEVELOPMENT OF RURAL FOREST INDUSTRIES IN VIETNAM
Project
title:
Improvement of operator skills and technology in small rural sawmill
s in
Vietnam
Project c
ode
:
CARD 027/06 VIE
Author
s:
Prof.
Peter V
inden
1
, Philip Blackwell
1
and Dr. Pham
Duc Chien
2
Project Implementing organi
s
ations:
1
The University of Melbourne, Australian Centre for Advanced Wood Processing

Detailed analysis of specific sectors (sawmilling, drying and preservation) has highlighted the
technical need
s of these sectors, the technology options available and the cost / benefits of adopting
particular technologies. Very specific recommendations have been provided in each of these sectors as
to the best technical and economic (low risk) options available f
or expanding into value adding.
The haphazard and exponential proliferation of small sawmills has identified the potential for this
industry to be self starting and sustainable with appropriate technologies and local investment.
However, the survey also i
dentifies the fragility of self help initiatives that are dependent on
continuing raw material supplies (albeit of low quality) and the scant availability of knowledge and
technical skills needed to value
-
add sawn timber output. Clear policy decisions and
action is needed
to ensure continuing raw material supply of improved quality, together with appropriate training and
the availability of appropriate technologies for value adding that can be taken up through the same
process of self
-
help. At the same time
training needs to be provided that will upgrade skills and
awareness of OH&S issues.
Training materials and infrastructure have been developed and tailored to the requirements identified
in the survey. Implementation of policy recommendations from the re
ports will have a major impact on
the long
-
term development of the industry and future development of rural communities.
CARD 027/06
–

Exports increased on average by 43%
annually
between 2000 and 2008.

Vietnam has become the 4th largest global
manufacturer and exporter of furniture that
together with handicrafts are exported to
over 100 countries.

Domestic production of timber is
supplemented by significant imports of
unprocessed
logs. Fifty
-
three percent of
logs processed in Vietnam are imported.
The value of timber imports exceeds US$1
billion.

Vietnam uses 11 million m3 of wood / year
of which 57% is used for sawn timber for
producing outdoor and indoor furniture and
constructio
n timber. The percentage end
-
use of acacia produced by rural sawmills
(derived from questionnaires directed at
small rural sawmills, (Blackwell et al,
2009) highlights also the importance of the
domestic markets for furniture production.

Very little information is available on the rural
sa
wmilling industry in Vietnam or its
prospects. The objectives of this project were
therefore to:

Identify and define industry problems,
needs and opportunities through a
comprehensive survey and review of the
rural sawmilling industry.

Establish processes
and infrastructure for
training and technology development

Develop and conduct training programs to
improve operator sawmilling and business
skills for trainers and for mill operators.

Investigate demonstrate and recommend
more appropriate or alternative
t
echnologies to improve industry
performance.

Develop long
-
term strategies for industry
development
2.

-
use markets
, equipment used,
employee statistics, problems identified by
owners, and owner’s views on development
needs of industry. A complementary survey
was also undertaken to include plantation
growers to assess their views on markets and
prices and sawn timber b
uyers to assess their
views on sawn wood products purchased. The
findings were supplemented by a separate
report outlining the current state of
development of forestry and the forest
industries in Vietnam, their contribution to the
economy and rural develo
pment and potential
to grow in the future. These reports were used
as background to developing more detailed
reports on individual sectors of the industry
including sawmilling, wood drying,
preservation, forest industries education and
training, research a
nd extension.
Structured programs of sawmill training for
rural communities were developed based on
the needs analysis identified in the survey of
rural sawmills. The focus for this training was
technical rather than training in business skills,
since it

potential markets in building
and construction
that have not been realised. The absence of any
planned long term supply of logs to rural
sawmills servicing the domestic market means
that there is insufficient security for any
entrepreneurial activity to either invest in kiln
drying equ
ipment or sawmilling equipment.
The problem is difficult in Vietnam because of
a shortage of suitable forestry land, the small
size of farms where farm forestry might be
practiced.
Analysis of the forests industry sector
highlights a number of important a
ttributes
impacting on future directions for the industry.
Firstly the forest products industry is an
important export
-
earning sector that should
continue to expand in the future. Protocols
need to be in place to ensure that pests and
diseases are containe
d and are not imported
with unprocessed logs. Control methods need
to be in place pending outbreaks of timber and
forest diseases. Export of furniture and crafts
requires similar safeguards i.e. inspection to
ensure that exports are free of any pests that

processing of acacia and eucalyptus species
Vietnam identified that approximately 90 % of
the rural sawmills operating in Vietnam are
family businesses. Ten percent are private
companies. The growth in rural saw
mills has
been relatively recent. Of all the sawmills
interviewed none had been in operation longer
than 18 years. The average time that sawmills
had been in operation was 5.3 years thus
indicating that the expansion of the rural saw
-
milling industry has b
een very recent. This
probably reflects the maturing of acacia
plantations that forms the raw material base for
this industry and the freeing up of the economy
to promote entrepreneurial activity. The survey
identified that a large number of the rural mill
s
only operated part time.
Table 1.
Percentage number of sawmills
operating full time
Region
Full time operation
North
25
Central
52

r. Reasons forwarded
for identifying these potential opportunities
related to a perception that there were
substantial market opportunities in these
particular sectors. The main obstacles
hindering expansion related primarily to a lack
of funding followed
by the lack of available
skills. Other issues included the availability of
quality raw material, lack of good managerial
skills, a lack of knowledge and unstable
market conditions. In most instances, there was
a perception that there was an expanding
marke
t for furniture and that expansion into
such areas would stabilise demand for sawn
timber.
Fig 1
.
Typical verticcal sawmill with carnage that
moves the logs past the saw
Fig 2
.
Typical horizontal sawmill with operators
pushing the saw over the log
Saw
-
milling equipment (horizontal and
vertical bandsaws) have been manufactured
almost exclusively in Vietnam. Mill expansion

Replacing old circular saws.

Further processing undertaken by
sawmills to add value include:

Air
-
drying. Only a third of all sawmills
eng
age in drying.

Kiln drying is undertaken by relatively
few mills, although a number of mills
send their timber to enterprises that
specialise in kiln drying,

Preservative treatment was being
conducted by 13 enterprises

Integration of sawmills into
manufact
uring was reported and focused
mainly on furniture pallet making and
construction.
Those companies involved in kiln drying were
experiencing very serious problems
particularly in relation to drying to a consistent
moisture content and identifying suitable
drying schedules for eucalypts and some native
species. The Australian team observed some

compounded the problem often resulting in a
discontinuity in s
upply. Research needs to
address the whole question of log supply.
Techniques need to be developed to reduce
sap
-
stain including proper housekeeping
techniques at the sawmill to lift logs off the
ground and provide timely rotation of the
stockpile. This i
s needed to avoid the
development of a decay environment in the
yard. The biggest problem (25% of
respondents) in relation to log quality was the
presence of sweep (i.e. bent logs). Inevitably
sweep resulted in the crosscutting of logs into
short lengths.
The most common log length
was 2.4 metres.
An end use analysis of timber derived from the
survey is summarised in table 2.
CARD 027/06
–
Improvement of rural sawmills
255
Fig
3
.
Two methods of air drying typical for sawmills in Vietnam

1%
1%
0
Other
5%
5%
0
10%
TOTAL
100%
100%
100%
100%
Fig
4
:
I
nside a kiln
Fig
5
:
Pressure treatment vessel in large sawmill
These statistics highlight a very high
proportion of timber being used in furniture
manufacture, particularly in North and Central
Vietnam. In the South, pallets and crates
domi
nated the market. In construction, timber
is used mostly for formwork (shuttering for
concrete). This is a relatively low value (but

strengths were also identified as weaknesses
Strengths

Cheap labour

Experience

Easy to run business

Cheap equipment
Weaknesses

Technology and equipment is
old

Lack of knowledge in marketing,
business and management skills

Lack of finance

Unstable market demand

Space for expansion is limited
Opportunities

Expanding into furniture manufacture

Government policy that allows
a
sawmill to run its own business

current training in wood processing is
summarised below. Data has been
amalgamated for all regions (i.e., North,
Central and South).
Table 3.
Survey analysis of past training
experience by sawmills
(Un
it
%
)
Staff receiving training in the past
13
Enterprises interested in receiving
training
73
Enterprises indicating that the
quality of existing training courses
was a problem
53
Enterprises indicating that the
training in the past wasn’t relevant
to
their needs
63
The survey analysis of past training experience
in forest industries in Vietnam (Blackwell et al
2010) poses a serious problem, firstly because
of the low incidence of staff and labour
working in sawmills receiving any training,

40
The training is not relevant.
63
Training is not suited to the equipment.
20
The distance is
too far for training.
13
The equipment at the institute is too old.
3
The same questionnaire attempted to prioritise
the topics that enterprises felt were important.
CARD 027/06
–
Improvement of rural sawmills
257
The topics have been ranked based on the
priority accorded by those enterprise
s
interested
in receiving training (table 4
).
Table 5.
Ranking of training topics
Topic
Ranking
Further manufacturing
13.4
Saw Sharpening
12.2

-
on skills; how marketing can improve
their sales performance an
d how their day to
-
day performance can be lifted through
improved saw sharpening and better sawmill
practices.
A second tier of skills focuses on business
management, drying (air drying followed by
kiln drying), preservation and equipment
handling.
Element
s of enterprise management that need
further development include:

Information Technology and
Communication.

Project Management.

Leadership and Working in Teams.

Service Quality.

Occupational Health & Safety.

Managing Staff

Financial Management for

flow on benefits to the local community.
The first question that arises is whether the
“old fashioned” saw
-
milling equipment has
served its pur
pose and whether more
sophisticated saw
-
milling equipment should be
encouraged. In the short and medium term the
answer to this is probably no. Sawmill
efficiency (conversion of logs into sawn
timber) is amazingly high given the quality of
logs that are av
ailable to most of the rural
sawmills. It is unlikely that an improvement in
yield could be achieved by introducing more
sophisticated equipment. A very high
proportion of sawmills are not operating to full
capacity. Equipment breakdown was not
identified
as a core reason for equipment
working below capacity; rather raw materials
supplies and inconsistent markets were
identified as primary reasons. Higher cost
more sophisticated sawmills would exacerbate
this problem. The capital cost for establishing
a hor
izontal Vietnamese sawmill is very low,

ent
to dwellings.
Potentially there is no value to be achieved
from the government providing financial
incentives for establishing more low cost
sawmills. The investment needed to establish
new mills is low and is best left to market
forces. However, at th
e same time as the
survey was conducted audits were undertaken
of kiln drying operations. Many of the kilns
inspected were imported and of high quality.
In addition Vietnamese manufactured kilns
ranged from being well
-
designed units that met
the requiremen
ts for drying acacia and
eucalypt species, through to poor quality in
-
house built units, which produced questionable
quality material. However, operation of all of
these kilns was sub
-
optimal due to the failure
to use fairly basic drying principles and
uti
lisation of standard monitoring equipment
(i.e. wet bulb sensors) to ensure correct
operation. In other words drying was achieved

-
drying requires a great
deal of skill and a surprisingly low percentage
of sawmills engage in air
-
drying. Space is an
issue for many mills as is training i
n air
-
drying
practices. There is also a question of the
minimum moisture content that could be
achieved using air
-
drying. It is anticipated that
this would be approximately around or just
below fibre saturation point (fsp).
The utilisation of solar drying
technology is
considered to be a viable and economic
alternative option. Initial research results
indicate that significant savings can be
obtained. All of these issues have been
reported separately and recommendations
made to facilitate an industry impro
vement in
drying. High quality seasoning and drying are
prerequisites for successful furniture
manufacturing. Many small rural sawmills
have their sight set on furniture manufacturing

the need in some severe cases for prophylactic
treatments at the sawmill
to alleviate stain and
decay. A high volume of acacias is used in
furniture and the survey indicates that this
market will continue to grow and substitute the
use of acacias in low value uses such as
packaging, crates, boxes etc. Much of the
domestic furn
iture uses a dark lacquer finishes.
This is an effective strategy in masking stain in
wood. However, as the market expands,
fashion may change to bring about a demand
for furniture that displays the intrinsic species
characteristics. This is the case for s
hort clear
CARD 027/06
–
Improvement of rural sawmills
259
lengths of rubber wood for export. The market
requires a light colour. Export rubber
-
wood is
inevitably preservative treated to prevent sap
stain. Ten years ago this would have involved
treatment with relatively high concentrations
of PCP (Penta
chlorophenol
–

and dust were no
t considered by the survey of
owners but were audited at the time of the
survey. Long
-
term health issues (nose, lung
capacity hearing and eye
-
sight) are of concern.
Implementation of current Vietnamese
legislation in relation to OH&S needs to be
taken on b
oard by mill owners. OH&S training
is obviously one of the key strategies in
implementing change in the work place. Future
education training and research needs is
reported separately but takes into account the
findings from the survey.
The survey provide
s some quantification of the
basic needs of rural saw milling in Vietnam.
The exercise provides invaluable information
from which strategies can be developed for
improving the performance of the industry.
Key issues identified by the survey that require
fu
rther investigation include the lack of
information in relation to log supply. This is an
issue that needs to be addressed by the
Vietnam Forest Service. Secondly the

rbon tax, this anomaly to a
level playing field should see adjustments in
the relative cost of wood as a raw material.
The issue is how do we ensure that wood
products are credited with carbon storage and
the inevitable life cycle benefits that
undoubtedly
accrue? Clearly Government
policies and protocols need to be applied justly
so that the true life cycle benefits are captured.
The role of forest product research laboratories
is therefore changing and needs to change
quickly. Governments have been slow
to
identify the vital role that industrial forestry
and wood products can make in rolling back
CO2 emissions and sustaining rural
infrastructure. This report recommends
that a
Forest Products Laboratory (Centre of
Excellence) is established in Hanoi under
the
banner of the Vietnam Forestry Department to
provide such leadership.
The detailed survey of rural sawmills
undertaken as part of the CARD project
together with comments received from CARD
courses provided to sawmill workers and
sawmill owners identif
ied the following


Extension (Farm forestry utilisation).
Other strategies recommended to assist rur
al
sawmill development include the
establishment of a Timber Preservation
Authority (TPA), effectively a Board made up
of stakeholders that have an interest in
improving the durability of timber used in
Vietnam. The Board would have responsibility
for defi
ning policy that meets the needs of all
parties. Implementation of the policy and the
policing of standards agreed by the Board is
then achieved through a specialized
department of the Forest Service. Important
roles for such a department include:

Working
with customs to ensure that
pests and diseases relating to trees and
timber products are kept out of
Vietnam

Working with customs and timber
manufacturers to ensure that timber
products are clean of pests and
diseases that might be exported with
the produc
ts.

understand commercial research and be
familiar with the workings of governments and
departments charged with responsibility for
managing national standards. The team needs
to have strong linkages into a wood drying
r
esearch group and research groups focused on
wood anatomy, life
-
cycle analysis, forestry,
economics and statistical analysis.
A similar team of scientists is needed in the
wood drying. Skills include:
Process control scientist
Wood drying experts (2)
Wood
Scientist
Modelling expert
Microwave technology expert
A “Wood drying improvement program” needs
to be established by the Forestry Research
Institute that provides customised advice and
generic training on site at each processing
facility where drying i
s undertaken. Some
nominal charge should be made for the
provision of this service. It is anticipated that
the service would take approximately 1week
and could
involve staff from the wood protection and


A model should be developed for th
e
creation of modern drying plants for
clusters of small
-
scale sawmills and/or
clustering existing sawmills into larger
units to improve processing and drying
techniques. Funding is needed to
support the building of appropriate
kilns.
In an era of rapid
global warming and peaking
oil and natural gas production, forest
ecosystem management of our relic forests and
reafforestation of redundant land, should be at
the forefront of any campaign to roll back our
carbon footprint whilst at the same time
maintai
ning or increasing economic
productivity and environmental improvement.
There is an overwhelming need to establish
“New Forests Vietnam”; large public forest
lands located adjacent to densely populated
cities that re
-
establish species indigenous to
the are
a, thus expanding biodiversity,

here is increasing recognition of
the role of forestry and forest industries in
rolling back global warming; providing a
stable ecology for native vegetation and raw
materials for new sustainable industries. A
cringe faction will rigorously dispute the nee
d
for intervention in these industries. However,
the lack of engagement by the forestry sector
in relation to global warming and its pivotal
role in the debate on climate change and
reducing fossil fuel consumption is pointing to
a market failure of this s
ector in many parts of
the world. Global warming and future
uncertainty means that we can no longer afford
to remain inactive or hide behind a blind belief
that market forces will bail out the need for
making responsible decisions for future
generations. I
n an era of global warming and
potential energy shortages, we have to find
alternative means for maintaining productivity
in industrial manufacturing, but at the same
time uncouple our dependence on oil and
other
non
-
renewable resources.