The nation is on track to posting earnings of US$500mil from the export of wooden furniture in the first four months of this year, a year-on-year increase of 7%, reported the Ministry of Agriculture and Rural Development.

Industry watchers say the figure could exceed $2bil by the end this year.

European Union markets are expected to become increasingly important for the industry. With rising demand for furniture imports in the second and third quarter of 2005, the bloc imported $150mil of Vietnamese furniture, according to statistics revealed by the Ministry of Trade.

Industry watchers said domestic furniture producers should step up trade promotions to spur sales, especially in other EU markets such as Latvia, Malta and Estonia, which remain untapped by Vietnamese exporters. The trade ministry said France, Britain, Germany, Holland and Spain were the union's top importers of Vietnamese-made wood furniture.

The country's wood processing industry remains dependent on imported wood. Producers import almost 2.5mil cu.m of timber each year to meet domestic production demands, said the ministry. However, the industry is facing widespread material shortages due to restrictions on timber exports from Indonesia and Malaysia, the nation's main suppliers of wood.

According to the Ministry of Industry, Vietnam spent US$127mil on timber imports in the first quarter of 2006, down by 17% from the same period last year.

To deal with the shortage, wood processors looked to African suppliers, but added freight charges meant the timber would be 30% more expensive, it said.

Representatives from leading companies in the wood processing industry have asked the Government to step up forest cultivation and sign bilateral trade agreements with African countries.

They suggested that since many African nations import significant volumes of Vietnamese rice, the nation should implement rice-for-timber trade programmes.