Farmers take care of saplings. About 60 per cent of forest growers lack CLUR for their lands. — Photo baochinhphu.vn

HÀ NỘI — Insiders are calling for a revision to Circular 27 on the traceability of forest products to plug the legal gaps that have been holding back firms for years.

Tô Xuân Phúc, an expert at Forest Trends, said there is a common misconception that timber harvested from cultivated forests is automatically legal and carries no risk.

In fact, forest owners are required to present sufficient documentation to prove the timbers' legality under the circular. In case of failure to present the dossiers, the timber is referred to as illegal.

"About 60 per cent of forest growers have not been granted certificates of land use rights (CLUR). Without the papers, their land ownership will not be recognised by law, and neither their timbers," he said.

The expert called for a draft amending the circular, which allows local authorities to recognise timber ownership in advance and grant CLUR later in the long-term.

He also called for a favourable policy to encourage the transition from forest-growing households and individuals into sole-proprietorships, cooperatives and enterprises.

Đỗ Xuân Lập, Chairman of the Vietnam Timber and Forest Product Association, estimated the total areas of cultivated forests in Việt Nam at 4.4 million ha, which produce 30 million cbm of round timbers annually.

He said wood product manufacturers find it difficult to get value-added tax refunds since it is not an easy task to confirm the legitimacy of transactions along timber supply chains.

It is the case because transaction legitimacy requires valid land ownership, which is not always available upon request. Some lands lack CLUR, some get caught up in legal disputes, and others involve illegitimate transfers.

On top of that, parties involved in the transactions normally fail to fulfil their tax obligations and provide adequate dossiers at the moment of the agreements, rendering them illegitimate.

Many manufacturers have been left with no other choice but to find ways to "legitimise" their timbers to be eligible for tax refunds.

Nguyễn Ngọc Thanh, Director of the Thanh Quy Import Export LTD and Vice Chairman of the Binh Dinh Timber and Forest Product Association, opined that it is difficult for firms to present valid proof of origin for their timber under Circular 27.

The difficulty arises from the fact that commercial contracts related to the timber cannot be used to verify their origin. Without valid documentation, firms normally end up being noncompliant with the circular. 

Bùi Chính Nghĩa, Deputy Director of the Vietnam Administration of Forestry, admitted that Circular 27, which has been in place since 2018, has many shortcomings.

He said the Ministry of Agriculture and Rural Development is drawing up a draft to replace the circular. The draft has seven chapters, 40 articles and three appendices, regulating forestry products involved in supply chains.

"The voices of most supply chain participants need to be heard to ensure the draft's practicality," he said. — VNS