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INVESTMENT OPPORTUNITIES IN VIETNAM PART V. Paper industry
INVESTMENT OPPORTUNITIES IN VIETNAM [1]
PART V. Paper industry
PART V. Paper industry
Vietnam has favorable natural conditions for the development of pulp material areas; the ability to take advantage of paper type thanks to the network of buyers, as well as abundant and cheap working forces are also an advantage for the development of the industry.
However, infrastructure is still weak, production lines are still outdated, equipment is still deficient, leading to inefficient production and environmental pollution. Paper enterprises have mostly not been proactive in the sourcing of raw materials for production and the proportion of pulp imports is quite high affects the stability as well as production costs. In addition, businesses have not actively built their distribution system.
Currently, the demand for paper has increased as the economy continues to grow and Vietnam’s population keeps rising. While the Vietnamese government is accelerating the process of restructuring state-owned companies, rousing M&A activities of enterprises are opening up many investment and development opportunities. Joining CPTPP decreases the import tariff of paper from Japan from 10-15% to 0%, creating favorable conditions for paper packaging enterprises due to an abundant supply of raw materials and better selling prices.
Being a member of commercial organizations will increase competitive pressure and strict requirements on production standards and product quality, especially in the high-end paper segment, which we cannot produce yet, and the toilet paper segment is almost saturated. The paper industry is in the process of strong equalization. Paper enterprises have to switch from subsidy to a business serving the market mechanisms, initiating many difficulties and challenges.
* Actual production-consumption 2015 - 2019
The average annual consumption of paper per person in Vietnam in 2019 reached 53.29 kg of paper per person, higher than the previous year's consumption of 2.1%. However, Vietnam's paper consumption is still quite low, not commensurate with the population size, because domestically produced paper only meets 64% of the demand for paper, while the imported paper is better quality but higher priced.
Cardboard and packaging paper are reckoned to be the largest proportion of Vietnam's total paper production, accounting for 83.86%, second place is printed and written paper with a proportion of 6.86%. Finally, tissue paper and joss paper with a proportion of 5.9% and 3.38% respectively.
Paper packaging is currently the main consumer product due to the increasing demand for consumer goods, packaged foods, bottled beverages, and pharmaceuticals for on-site consumption and exports.
* Industry planning of the paper industry
Specific development goals of the paper industry to 2025:
• Achieving a domestic paper recall rate of 65%;
• Meet about 75-80% of domestic consumer demand, reduce the import rate of paper and pulp products;
• Unlicensed and gradual removal of outdated pulp and paper factories with a scale of fewer than 10,000 tons per year;
• Basically, the Vietnam paper industry becomes a modern industry.
Development orientation:
• In terms of technology: Applying the most advanced technology in the pulp and paper production industry for new investment projects and renovation upgrades, including biotechnology, biomass, and nanotechnology, applying cleaner production technology to operating plants, applying advanced technologies in wastewater treatment, wastewater and solid waste treatment, water reuse, production line closing, environmental pollution reduction; Research application put into the production of high-tech cardboard used in industry and civil to dominate the domestic market is being ignored by the paper industry, restricting imports; Save energy materials, improve the efficiency of collecting and recycling paper type (OCC and DIP) to save forest resources, water resources and protect the environment.
• In terms of scale and capacity of investment projects: Capacity of paper factories at least 50,000 tons/year; priority and encouragement factories with a capacity of over 100,000 tons/year. The capacity of pulp factories from 100,000 tons/year to 200,000 tons/year or more, to ensure modernization conditions and economic efficiency.
• In terms of investment capital: Taking advantage of foreign investment capital reasonably, ensuring the leading role of domestic enterprises, especially Vietnam Paper Corporation. The implementation of this motto depends on the characteristics of each project, each locality, each specific stage to decide the appropriate investment method (domestic investment, the joint venture with foreign countries, or 100% foreign investment).
• Regarding the planning layout: Only investment and construction of pulp production plants or pulp and paper joint production plants in regions and areas that have been planned to produce pulp.
[1] Vietnam Investment Promotion Guidebook
However, infrastructure is still weak, production lines are still outdated, equipment is still deficient, leading to inefficient production and environmental pollution. Paper enterprises have mostly not been proactive in the sourcing of raw materials for production and the proportion of pulp imports is quite high affects the stability as well as production costs. In addition, businesses have not actively built their distribution system.
Currently, the demand for paper has increased as the economy continues to grow and Vietnam’s population keeps rising. While the Vietnamese government is accelerating the process of restructuring state-owned companies, rousing M&A activities of enterprises are opening up many investment and development opportunities. Joining CPTPP decreases the import tariff of paper from Japan from 10-15% to 0%, creating favorable conditions for paper packaging enterprises due to an abundant supply of raw materials and better selling prices.
Being a member of commercial organizations will increase competitive pressure and strict requirements on production standards and product quality, especially in the high-end paper segment, which we cannot produce yet, and the toilet paper segment is almost saturated. The paper industry is in the process of strong equalization. Paper enterprises have to switch from subsidy to a business serving the market mechanisms, initiating many difficulties and challenges.
* Actual production-consumption 2015 - 2019
The average annual consumption of paper per person in Vietnam in 2019 reached 53.29 kg of paper per person, higher than the previous year's consumption of 2.1%. However, Vietnam's paper consumption is still quite low, not commensurate with the population size, because domestically produced paper only meets 64% of the demand for paper, while the imported paper is better quality but higher priced.
Cardboard and packaging paper are reckoned to be the largest proportion of Vietnam's total paper production, accounting for 83.86%, second place is printed and written paper with a proportion of 6.86%. Finally, tissue paper and joss paper with a proportion of 5.9% and 3.38% respectively.
Paper packaging is currently the main consumer product due to the increasing demand for consumer goods, packaged foods, bottled beverages, and pharmaceuticals for on-site consumption and exports.
* Industry planning of the paper industry
Specific development goals of the paper industry to 2025:
• Achieving a domestic paper recall rate of 65%;
• Meet about 75-80% of domestic consumer demand, reduce the import rate of paper and pulp products;
• Unlicensed and gradual removal of outdated pulp and paper factories with a scale of fewer than 10,000 tons per year;
• Basically, the Vietnam paper industry becomes a modern industry.
Development orientation:
• In terms of technology: Applying the most advanced technology in the pulp and paper production industry for new investment projects and renovation upgrades, including biotechnology, biomass, and nanotechnology, applying cleaner production technology to operating plants, applying advanced technologies in wastewater treatment, wastewater and solid waste treatment, water reuse, production line closing, environmental pollution reduction; Research application put into the production of high-tech cardboard used in industry and civil to dominate the domestic market is being ignored by the paper industry, restricting imports; Save energy materials, improve the efficiency of collecting and recycling paper type (OCC and DIP) to save forest resources, water resources and protect the environment.
• In terms of scale and capacity of investment projects: Capacity of paper factories at least 50,000 tons/year; priority and encouragement factories with a capacity of over 100,000 tons/year. The capacity of pulp factories from 100,000 tons/year to 200,000 tons/year or more, to ensure modernization conditions and economic efficiency.
• In terms of investment capital: Taking advantage of foreign investment capital reasonably, ensuring the leading role of domestic enterprises, especially Vietnam Paper Corporation. The implementation of this motto depends on the characteristics of each project, each locality, each specific stage to decide the appropriate investment method (domestic investment, the joint venture with foreign countries, or 100% foreign investment).
• Regarding the planning layout: Only investment and construction of pulp production plants or pulp and paper joint production plants in regions and areas that have been planned to produce pulp.
[1] Vietnam Investment Promotion Guidebook
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