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Paper production rolls out as pressing issue
Viet Nam is practising an exercise in loss, importing expensive pulp and paper products while exporting wood at low prices.
In the first seven months of this year, the country imported 118,000 tonnes of pulp, worth US$82 million, up 66 per cent in volume and 86 per cent in value from the previous year.
During the same period, Viet Nam spent around $471 million importing 585,000 tonnes of various kinds of paper products, an increase of 24 per cent in quantity and 40 per cent in value.
Last year, the country also had to import 130,000 tonnes of pulp and 820,000 tonnes of paper products.
The paradox has been prolonged because most projects to process pulp and paper in the country have been postponed, while local demand continued to rise.
To satisfy local demand, the country had to import around 70 per cent of pulp and paper products, according to the Viet Nam Paper and Pulp Association.
Viet Nam had to spend even more money importing pulp and paper in face of the pricing storm on various kinds of goods in the global market.
For instance, in May 2008, the price of pulp was around US$735 per tonne, 13 per cent higher than last May.
Bottlenecks
Although many investors have poured money into paper mills, they have not invested in producing the raw materials necessary for production.
Most manufacturers were put under pressure due to a lack of capital, limited loans and out-dated machines.
Bui Xuan Khu, deputy minister of the Ministry of Industry and Commerce, said in an interview with Investment Review that foreign investors have not been interested in paper, despite favourable policies introduced by the Vietnamese Government.
Delayed profits, low productivity and forest fire risks hinder investors from looking into this field.
To deal with the problem, the paper industry has tried to take aggressive measures to meet increasing domestic demand.
Currently a State-owned business, the Paper Corporation’s Management Board has submitted to the Government an application to transform the Thanh Hoa Paper and Pulp factory into a joint stock company with 30 per cent State equity.
With a design production capacity of 100,000 tonnes of pulp and 130,000 tonnes of paper a year, Thanh Hoa factory will provide recycled paper, printing paper and writing paper to the local market.
In addition, the Paper Corporation has hastened implementing other key projects to ensure paper supply in the coming years.
The second phase of Bai Bang Paper Mill’s expansion in the northern province of Phu Tho has already completed land procedures from clearance to compensation, as well as credit contracts.
The corporation is also rushing to complete the DIP pulp production line with a capacity of 20,000 tonnes per year at the Duong River Tissue Paper company.
Next, the Quang Ngai-based paper and pulp project, with a capacity of 300,000 tonnes of pulp and 220,000 tonnes of white paper, is set to start operations soon.
Tan Mai Paper Joint Stock Company, one of the biggest paper producers, has worked to maximise its capacity while importing newsprint to satisfy local demand in September.
In a similar effort, Viet Nam Vinatech Technology Supermarket in July signed an agreement with Japanese Taise and Ohhara Group to transfer non-wooden pulp production technology.
The technology will take advantage of available materials in Viet Nam such as straw, sugar cane refuse and eucalyptus to make paper.
The production line will have a capacity ranging from 15 to 30 tonnes a day with an average price of $600 per tonne and hopefully reaching $18,000 a day.
The corporation has also asked the Government and other related agencies to remove the tariff on paper imports while developing policies to call for investment into the paper sector.
The corporation said that it planned to reach an annual paper production of 310,000 tonnes this year.
VNS
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