Financial Analysis and Comparison of Smallholder Forest and State Forest Enterprise Plantations in Central Vietnam

SUMMARY State forest enterprises (SFEs) in Vietnam for decades were the main source of industrial wood production, but smallholder forest plantations have become common. Smallholders need positive financial returns to be viable. Likewise, financial returns are an important consideration of proposals to turn SFEs into joint ventures, because the potentially involved private companies would seek reasonable returns on investment. Financial analyses of smallholder and SFE forest plantations were undertaken to evaluate their competitiveness and profitability, and to assess opportunities and challenges for the sector. It was found that forest plantations in Vietnam, under current market conditions, can be profitable. Smallholders who received technical assistance and financial support could generate average land expectation values (LEVs) of about US$ 5 100/ha at 8% discount rate. Even without financial support, and assuming smallholders pay for the cost of technical assistance, average LEVs were about US$ 4 600...