Decision No. 1565/QD-BNN-TCLN approves the "Scheme for Restructuring the Forestry Sector"

Pursuant to …;

Approving the "Reorganization Project for the Forestry Sector"

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THE MINISTER OF AGRICULTURE AND RURAL DEVELOPMENT

Pursuant to Decree No. 01/2008/ND-CP dated January 3, 2008 of the Government stipulating the functions, tasks, and organizational structure of the Ministry of Agriculture and Rural Development and Decree No. 75/2009/ND-CP dated September 10, 2009 of the Government amending Article 3 of Decree No. 01/2008/ND-CP stipulating the functions, tasks, powers, and organizational structure of the Ministry of Agriculture and Rural Development;

Pursuant to Decision No. 18/2007/QD-TTg dated February 5, 2007 of the Prime Minister approving the Strategy for Vietnam's Forestry Development during the period 2006-2020;

Pursuant to Decision No. 57/QD-TTg dated January 9, 2012 of the Prime Minister approving the Plan for Forest Protection and Development during the period 2011-2020;

Pursuant to Decision No. 124/QD-TTg dated February 2, 2012 of the Prime Minister approving the Overall Planning for Developing Agricultural Production until 2020 with Vision to 2030;

Pursuant to Decision No. 339/QD-TTg dated February 19, 2013 of the Prime Minister approving the Comprehensive Reorganization Project for Economic Restructuring Linked to Transformation of Growth Models towards Enhancing Quality, Efficiency, and Competitiveness during the period 2013-2020;

Pursuant to Decision No. 899/QD-TTg dated June 10, 2013 of the Prime Minister approving the restructuring program for the agricultural sector towards increasing added value and sustainable development;

Considering the proposal of the General Director of the Forest Protection Department,

DECISION:

Article 1. Approves the Reorganization Project for the Forestry Sector with the following main contents:

I. OBJECTIVES

1. General objectives

 Developing sustainable forestry in terms of economy, society, and environment; gradually shifting growth models towards enhancing quality, efficiency, and competitiveness.

2. Specific objectives

- Increasing added value of forest products and environmental services; raising average annual production value by 4-4.5%.

- Gradually meeting domestic demand for wood and forest products and export.

- Contributing to job creation, poverty reduction, improved livelihoods, and environmental protection for sustainable development.

II. DIRECTION

1. Structure of forest types

 - Total forest land area by 2020 will be approximately 16.2-16.5 million hectares, including: production forests 8.132 million hectares, protective forests 5.842 million hectares, and special-use forests 2.271 million hectares.

- Protective forests: allocating 5.842 million hectares mainly for critical areas, including 5.6 million hectares of upstream protective forests, 0.18 million hectares of coastal protective forests, 0.15 million hectares of windbreak and sand-fixing forests, 70 thousand hectares of urban and industrial protective forests, and border and island protective forests.

- Special-use forests: consolidating the existing forest system of 2.14 million hectares towards improving quality, biodiversity value, and ensuring forest quality criteria. For ecosystems that are not yet present or are scarce, developing new zones in the northern mountains, North Central region, Central Highlands, and wetland areas in the Red River Delta and South, with an area of about 60 thousand hectares.

- Production forests: allocating approximately 8.132 million hectares, with the area of production forests being planted forests in the upcoming phase around 3.84 million hectares, including 2.4 million hectares of existing planted forests, 1.0 million hectares of newly planted forests, and 0.35 million hectares of natural forest rehabilitation, among which planning and constructing concentrated large timber planting areas with an area of about 1.2 million hectares to provide raw materials for processing industries.

2. Enhancing added value of the sector

a) Changing the comprehensive approach along the product journey from raw material creation to harvesting, processing, and consumption, where the forest product market (domestic and export) and mechanisms and policies play a crucial role in guiding the structure of key crops for planting forests serving the production of commercial forest products.

b) Developing and improving forest quality

- Natural forests:

+ Increasing the stock volume of natural production forests by 25% compared to the current level, achieving an average growth rate of 4-5 m3/ha; Improving the quality of natural forests to reach a ratio of marketable wood volume equal to 75% of standing tree volume. Cultivating 0.7 million hectares of recovering forests; enclosing and promoting regeneration in 0.75 million hectares; enriching 1.1 million hectares of forests; rehabilitating 0.35 million hectares of depleted natural forests.

+ By 2015, the area eligible for exploitation will be approximately 50 thousand hectares, about 117 thousand hectares by 2020, and about 215 thousand hectares by 2030, with an average extraction rate of 30 m3/ha.

- Planted forests:

+ Increasing productivity to an average of 15 m3/ha/year, by 2020, the area of planted production forests will be approximately 3.84 million hectares, annually harvesting and replanting 0.25 million hectares, with an average stock volume of about 150 m3/ha for large timber forests, with an average cycle of 12 years; 70 m3/ha for small timber forests, with an average cycle of 7 years.

+ Improving forest quality to achieve a yield of marketable wood equal to 80% of stock volume, with 40% large timber and 60% small timber.

 + Increasing the proportion of new recognized tree species in production to 60-70% by 2020, ensuring sufficient supply of high-quality seeds, contributing to increasing plantation productivity by 10% in 2015 and by 20% in 2020 compared to 2011.

c) Developing wood processing industry

- The wood processing and trade industry is considered a driving force for Vietnam's forestry economy, building the wood processing industry into a modern, advanced, and integrated production sector (from raw material supply to processing and product consumption), capable of high competition; increasing export turnover and meeting domestic consumption needs; with full participation of all economic sectors.

- Adjusting the structure of wood and non-wood forest products, especially export products, towards increasing the proportion of forest products using domestically grown raw materials, developing harmoniously both exterior and interior wooden products, and minimizing the export of raw products (including wood chips).

- Planning products according to regions and sub-regions linked to the planning of raw material forest planting to ensure overall investment effectiveness.

- Domestic wood product structure: furniture 45%, artificial wood 55% (MDF particleboard 26%, laminated board 26%).

- Artificial wood production: 2.3 million m3 of products by 2015, 3 million m3 of products by 2020, and 3.9 million m3 of products by 2030.

- Increase the ratio of domestic raw wood usage, reduce the ratio of imported raw wood for the wood processing industry. By 2015, the volume of domestic raw wood available for the wood processing industry will be 10.5 million cubic meters, meeting approximately 50% of demand; by 2020, it will reach 14.5 million cubic meters, meeting approximately 62% of demand; by 2030, it will reach 24.5 million cubic meters, meeting approximately 75% of demand.

- Scale of wood processing enterprises:

+ Review, consolidate, and upgrade the system of medium and small-scale wood processing facilities, while developing large-scale wood processing facilities.

+ Plan and reasonably arrange factories according to regions, prioritizing the construction of factories in mountainous areas with sufficient raw materials to create jobs and income for local people, contributing to promoting industrialization and modernization in rural mountainous areas; the scale of wood processing factories is 60,000 to 100,000 cubic meters of products per year for MDF, 20,000 cubic meters of products per year for particleboard, and 10,000 cubic meters of products per year or more for furniture manufacturing.

- Develop carpentry villages: upgrade some carpentry villages and streets in the Northeast and Central regions into enterprises and cooperatives, establish industrial clusters in rural areas mainly producing household wooden goods for the domestic market, and link with large wood processing enterprises in the region.

- Support the development of non-wood forest product processing enterprises that extract natural active ingredients from medicinal herbs; enterprises and facilities for wood and rattan handicrafts.

3. Economic components in forestry

a) Forest management organizations

- Adjust the structure of various types of forest management organizations towards state organizations directly managing about 50% of the total national forest area, including all special-use forests, 65% of protective forests, and 30% of production forests.

- Review, reorganize, and establish new Forest Management Boards based on reviewing forest planning.

- Promote the sustainable development of various forms of forest protection management organizations, integrate them into the international economy, ensuring the compatibility between the mode of production and productive forces in forestry.

b) State-owned forestry companies formed from state-owned forest farms

Based on reviewing forest planning, transform Forestry Companies through the following forms:

- Shareholding with the state retaining controlling shares.

- Transform into Forest Management Boards.

- Dissolve or transform into other forms.

c) Development of private economy and cooperative economy

- Establish cooperation models in forestry, increasing the number of forestry cooperatives at least by 200% by 2020 compared to 2011.

- Promote and create favorable conditions regarding institutional frameworks and diverse, flexible forms to allow farmers and households to contribute the value of land use rights together with enterprises to concentrate land for large-scale forestry production organizations.

- Leverage the role of forestry farms and ranches; exploit and utilize the advantages of tropical forestry, build and develop large-scale specialized areas in the form of farms and ranches; set criteria for ranches, increasing the number of forestry farms and ranches to 150% by 2015 and 200% by 2020 compared to 2011.

4. Mobilization and utilization of financial resources

a) Investment from the state budget

During the period 2011-2020, investment capital from the state budget will continue to increase due to implementing new mechanisms and policies for special-use forests.

During the period 2013-2020, ODA funding for forestry is estimated to account for 18% to 20% of the total capital needs, averaging about 700 to 800 billion VND annually (direct investment in forest protection and development activities is 250 to 400 billion VND), serving as the basis for balancing forest protection and development tasks for project areas in the Forest Protection and Development Program.

b) Investment outside the state budget

Investment outside the state budget is the main source of financial resources mobilized and utilized for forestry development in the coming period. To plant nearly 3 million hectares of forests, approximately 40 trillion VND is needed, accounting for 71% of the total capital requirement. In particular, the capital from payments for forest environmental services is expected to rapidly increase, reaching over 1 trillion VND annually. Additionally, efforts should be made to secure potential revenue from other financial support sources.

5. Development according to economic-ecological forestry zones

a) Northwest Region: Build and strengthen the system of upstream protective forests, special-use forests, and natural production forests within the watershed areas of cascade hydropower plants to enhance protective effects and enable localities to benefit more from the policy of payments for forest environmental services.

b) Northeast Region: Build the largest wood raw material supply area in the country, providing small wood raw materials for paper and particleboard industries near factories, and large wood raw material areas further away; build and strengthen the system of upstream protective forests and coastal protective forests.

c) Red River Delta Region: Vigorously promote scattered tree planting to provide household wood for provinces in the delta.

d) North Central Region: Build the second-largest wood raw material supply area in the country, providing wood raw materials for paper and particleboard industries near factories, and large wood raw material areas further away for furniture processing factories both within and outside the region; build and strengthen the system of upstream protective forests of the Truong Son Range and coastal protective forests against sand drift, wave blocking, and coastal erosion.

đ) South Central Coast Region: Build the third-largest wood raw material supply area in the country primarily supplying large wood raw materials for local wood processing industries and the Southeast region; build and strengthen the system of upstream protective forests and coastal protective forests against sand drift, wave blocking, and coastal erosion.

e) Central Highlands Region: Strengthen and protect the system of upstream protective natural forests through joint management and community forestry methods to maintain natural forest coverage.

g) Southeast Region: Strengthen and protect the system of upstream protective forests for hydropower and irrigation projects and environmental protection for industrial zones in the region.

h) The Mekong Delta region: constructing and reinforcing coastal protective forest zones; restoring and developing mangrove and Tram forest ecosystems to serve environmental protection and economic development; organizing integrated agricultural, forestry, and aquatic production for sustainable development.

III. SOLUTIONS

1. Reviewing and planning for forest protection and development

- Improving the quality of planning, linking strategies with plans, enhancing the effectiveness of state management over forest protection and development planning.

- By 2015, completing reviews and assessments of forest planning, determining to maintain reasonably the area of headwater forests and special-use forests (national stable forest compartments), transferring the remaining forest areas to develop concentrated forest raw material regions.

- Implementing the National Forest Protection and Development Plan, regional and local plans based on new structures through the implementation of Forestry Planning Projects.

- Implementing the plan for developing forest raw material regions for wood processing industries until 2020 and guiding directions until 2030 at the national level and according to economic-ecological forestry regions.

- Organizing reviews to determine the current status of forest and forestry land use under various managers, adjusting and reclaiming land from organizations and individuals who have been allocated but are not using effectively or not for intended purposes. - Planning and managing shifting cultivation areas to ensure a stable cultivation area for ethnic minorities.

2. Increasing added value in the industry

- Developing and improving forest quality: implementing projects

+ Project to improve the quality of forestry planting materials during the 2011-2020 period, selecting and creating at least 10-15 new varieties (acacia, eucalyptus, and other main planting varieties).

+ Project to increase productivity and quality of forests in Vietnam: developing high-yield plantation forests, increasing the proportion of raw wood supplied to wood processing and furniture manufacturing industries (large timber); identifying tree species groups suitable for plantation and scattered planting to meet the demand for processed wood in 6-8 ecological regions with large forest planting areas; establishing sustainable plantation forest management techniques.

- Fully implementing forest environmental service activities, including carbon markets; researching and building technological solutions for monitoring forest resources and environment, potential forest environmental services.

- Concentrating on developing competitive products.

- Promoting the processing of artificial boards, gradually reducing the export of wood chips; encouraging the use of products made from artificial boards and planted wood.

- Diversifying and continuously improving product quality and design to suit market preferences. Strengthening brand building and certification for export items, while implementing effective distribution systems.

- Establishing concentrated raw material supply regions linked with wood and furniture processing centers.

- Investing in forestry infrastructure construction (transportation roads, firebreaks, firefighting equipment...) using state budget and enterprise funds to reduce production costs (transporting seedlings, fertilizers, travel, transporting harvested wood, preventing forest fires).

3. Organizations managing and operating forestry

a) Organizing reviews to restructure forest management organizations based on the results of reviewing and assessing forest planning, clearly defining national stable forest compartments and raw material development areas.

b) Reforming management mechanisms and organizational structures towards enhancing autonomy for households, forest management boards, and enterprises through the restructuring project of forest management organizations.

State-owned forestry companies

- Regarding land:

+ Organizing land reviews, marking boundaries, and issuing land use right certificates, completed by 2015, funded by the state budget.

+ Reviewing and transferring land back to localities, completed by 2014.

+ Continuing to implement the contractual system, piloting joint forest management.

+ Expanding joint ventures, partnerships, and business cooperation contracts between forestry companies and other economic sectors, domestic and foreign organizations and individuals regarding production, processing, and consumption of products; creating a strong and stable link between raw material regions, producers supplying raw materials, and processing bases for agricultural and forestry products.

+ Resolving existing issues and obstacles related to land.

- Regarding finance, investment, and credit: focusing on handling debts, assets on land, and establishing special financial mechanisms.

- Reorganizing labor.

d) Private economy, cooperative economy

- Private economy:

+ Reviewing and issuing land use right certificates to households and individuals.

+ Reviewing the development planning of agriculture and forestry production, identifying regions for developing forestry farms and ranches, creating favorable conditions for the concentration of forest production land to develop household and private business forestry farms, announcing available land that can be allocated or leased for developing forestry farms.

+ Encouraging households to expand production and business activities and services, supporting trade promotion.

+ The state supports households, individuals, and farms in forming associations and unions of forest owners.

- Cooperative economy:

+ Linking and joint ventures among different economic components, within the same economic component, especially between forestry companies and households for planting raw material forests, processing, and consuming products.

+ Encouraging links among businesses and actors in planting, harvesting, processing, services, etc., to form a value chain for forestry products, increasing competitiveness in domestic and international markets.

+ Organizing farmers to cooperatively plant forests according to the common forest management plan of the cooperative/service cooperative, harmonizing household production plans with the overall cooperative/service cooperative plan, aiming to achieve sufficient and stable areas to provide a large annual volume of wood for the market.

4. Developing human resources

- Develop incentive policies to attract forestry workers in forest companies and state-managed forest enterprises.

- Encourage and facilitate cooperation and mutual support among businesses and training organizations in vocational training and skill enhancement for business employees.

- Vocational training for workers: expand various forms of vocational training linked with the transfer of new technologies, new techniques, and production processes to individual farming households; train craft villages and specialized production areas.

- Strengthen domestic and international training programs for management staff, researchers, and marketing personnel to enhance and supplement the ranks of skilled wood business managers on the international market.

5. Develop production organization models that integrate, centralize, and consolidate within the wood processing industry.

- Reorganize production along product chains (vertical integration), from forest planting, raw material procurement, to processing and product consumption stages.

- Establish medium and large-scale enterprises in each economic region, centered around existing strong enterprises and leading companies, which serve as hubs for production chains for key products, especially export products.

6. Expand markets

a) International markets

- Forecast, negotiate, and sign bilateral and multilateral international commitments (voluntary partnership agreements between the European Union and wood-exporting countries, etc.) according to the timeline for joining the World Trade Organization and minimizing risks in international trade for businesses.

- Promote trade: build regular furniture exhibition centers in three regions, establish information centers on wood processing and trade to understand market needs and changes, and implement policies to encourage and support Vietnamese wood businesses to participate in foreign furniture exhibitions.

- Commercial attachés abroad: provide support and market information, as well as local laws, to domestic wood processing associations; organize trade promotion programs and product promotions (especially in new markets such as Russia, Eastern Europe, Latin America, etc.).

b) Domestic markets

- Strengthen the organization of distribution channels and consumption of wood products, establish modern and civilized sales systems for wood products in major demand areas like Hanoi, Ho Chi Minh City, etc.

- Enhance the building of unique brands for wood products.

- Conduct market supervision and inspection for registered quality and labeled wood products.

7. Sources of investment and utilization of investments

- Mobilize and integrate resources, incorporate plans, programs, and projects; manage and operate a new financial structure. Integrate forest protection and development plans with socio-economic development plans, other programs, and projects in the same area to enhance overall socio-economic efficiency, environmental protection, and ensure national security and defense.

- Central government budget funds for development are focused on large-scale protective forest planting projects, national parks, projects in districts under Resolution No. 30a/2008/NQ-CP of the Government on the program to rapidly and sustainably reduce poverty in 62 poor districts, Northwest, Central Highlands; support for productive forest development; support for the construction of forest roads in concentrated raw material plantation areas but with difficult transportation conditions; research and experimental projects; advanced technology equipment investment projects and application of information technology in planning, management, and forest protection work; research and application of high-tech in seed selection, original seed production, intensive forest planting technology, local government budgets allocated to remaining projects according to general policy.

- State economic funds ensure the contracting of forest protection for special-use forests, weak protective forests at risk of being harmed, regeneration enclosure, monitoring forest and forest land dynamics, and other public expenditure costs.

- Implement the "Orientation for Attracting, Managing, and Using ODA, Preferential Loans, and International Support for Forestry Sector 2013-2020" in a way that prioritizes support for the implementation of the Forestry Development Strategy and Forest Protection and Development Plan 2011-2020 objectives.

- Concentrate scientific research funds to study and apply tested tree varieties, conduct land surveys to determine suitable forest planting areas based on crop types, and transfer intensive large and small timber planting technology to different ecological zones;

- Transfer large timber planting technology and high-yield varieties from countries with similar conditions to Vietnam using state budget funds, ODA projects, FDI, and large enterprises;

- Non-state budget funds are focused on developing productive forests, non-timber forest products, processing and consuming forest products, exploiting forest resources and services; promoting trade and developing markets; investing in areas traditionally funded by the state budget such as forestry seed development, forestry vocational training, providing technical services, extension services, etc.

- Other legitimate sources of funding such as payments for forest environmental services under Decree 99/2010/NĐ-CP, carbon credits, etc., are balanced with state budget, ODA, and non-budgetary funds to use effectively to fulfill annual forest protection and development tasks assigned by the Government...

- Review, supplement, and rebuild investment plans and financial plans for the forestry sector during 2012-2020, reflecting all appropriate resources in the new structure.

8. Mechanisms and Policies

- Review, supplement, amend, and develop new mechanisms and policies; establish a financial framework (Party Resolutions, Laws, Ordinances, Decrees, Decisions, regulations on management, use of the budget, investment, credit, resource mobilization, and utilization), operate in a coordinated and effective manner to mobilize, coordinate, socialize, and efficiently utilize financial resources for forestry development.

- Implement the "Orientation for Attracting, Managing, and Using Official Development Assistance, Preferential Loans, and Other International Support for the Forestry Sector from 2013 to 2020".

- Develop policies to support initial investment and preferential credit loans for afforestation suitable for each type of tree species and the repayment period of the loan when the main harvestable products become available.

- Study and propose mechanisms and policies to sustainably manage natural forests according to their functions (protective, special-use, productive), and sustainable development policies for non-timber forest products.

- Study and propose policies to encourage mobilizing and utilizing financial resources outside the state budget for the purpose of protecting and developing forests until 2020.

- Adjust benefit-sharing policies from forests.

- Test models of joint forest management between forest management organizations and local communities to serve as a basis for expansion.

- Test public-private partnership models in forest protection and development.

- Encourage and support the development of cooperative economies through preferential mechanisms and policies for cooperative organizations, such as initial capital support, application of advanced technology, market access...

- Establish mechanisms and policies to link wood producers, forestry companies with processing facilities and companies; encourage businesses to invest in forestry following a closed-loop model from production, processing, consumption, where farmers contribute capital to businesses through land use rights and act as shareholders of the business, sharing benefits.

- Policies to encourage investment in establishing concentrated raw material areas to serve the wood processing industry.

- Have transparent policies in attracting foreign direct investment.

- Develop preferential policies on investment (credit, tax, land lease...) for enterprises producing medium density fiberboard (MDF) panels and laminated timber.

- Develop policies to encourage preferential credit lending to traditional craft villages and small processing units in rural areas to provide stable pre-processed products for complete wood processing enterprises; long-term preferential credit for large-scale forest owners; allow farms and family farms to borrow funds from the state's development investment fund.

- Policies to encourage non-state economic sectors to participate in developing planted forests; encourage certification for planted forests.

Article 2. Implementation

1. The General Department of Forestry

a) Develop an action plan to implement solutions to carry out the project in phases until 2015 and from 2016 to 2020, regularly report to the Ministry on progress and results.

b) Take the lead and coordinate with relevant Bureaus and Departments to develop and implement programs, projects, and tasks:

- The Project to Improve the Quality of Forest Tree Seedlings from 2012 to 2020;

- The Project to Strengthen Management of Natural Forest Wood Harvesting from 2013 to 2020;

- The Project to Enhance the Quality of Productive Forests from 2012 to 2020;

 - The Project to Reform Mechanisms and Organizational Management of Forests from 2013 to 2020;

- The Project to Organize Protection and Development of Forests in the Central Highlands Region;

- Orientation for Attracting, Managing, and Using Official Development Assistance, Preferential Loans, and Other International Support for the Forestry Sector from 2013 to 2020;

- Enhance the capacity of the Vietnam Forest Protection and Development Fund;

- Other related programs and projects.

2. Units under the Ministry of Agriculture and Rural Development

According to their functions and responsibilities, organize the implementation of the project as follows:

a) The Processing and Marketing Bureau of Agriculture, Forestry, Aquaculture, and Salt Industry: implement the Wood Processing Industry Master Plan of Vietnam until 2020 and orientation until 2030.

b) The Science, Technology, and Environment Department: take the lead and coordinate with relevant units to review, amend, supplement, and develop new national standards and technical regulations in the forestry sector harmonized with international and regional standards; research and transfer new technologies into production to improve forest productivity and product quality.

3. Localities

The Department of Agriculture and Rural Development advises the People's Committee of provinces and centrally-administered cities:

a) Synchronize measures regarding land planning, forest protection and development planning, production structure, markets, capital, human resources towards leveraging local advantages and enhancing product competitiveness; complete the approval of restructuring, reform, and shareholding of state-owned forestry enterprises within their jurisdiction.

b) Direct and organize the implementation of the Wood Processing Industry Master Plan of Vietnam until 2020 and orientation until 2030 in accordance with the actual situation of the locality.

Article 3. This Decision takes effect from the date of signature.

Article 4. The Head of the Ministry's Office, the Director-General of the Forest Service, the Heads of relevant units under the Ministry, and the Departments of Agriculture and Rural Development of provinces and centrally-administered cities are responsible for implementing this Decision./.