Paper industry expects 10% growth

The paper industry expects to overcome last year’s obstacles and achieve a growth in production of 10 per cent this year, says Viet Nam Pulp and Paper Association general secretary Vu Ngoc Bao, who spoke to Viet Nam News about the industry’s strategy for 2010.

How did the domestic paper industry survive the difficulties in the world economy last year?

Paper producers in Viet Nam and other regional countries, including Japan and China, saw difficulties in production and business in 2009. But the difficulties brought a chance for producers to balance supply and demand, with some temporarily stopping production.

The fluctuations on the market made producers change their business strategies. For instance, the market for writing, printing and packaging paper all saw strong fluctuations, with the domestic packaging market brightening in mid-2009 before stalling again at the end of the year. At present, 66 per cent of the domestic paper industry is focused on packaging paper.

Paper producers made incorrect decisions about price in 2009 after incorrectly analysing the market. This is a lesson for producers to gain better results in 2010.

Despite all of the difficulties, producers saw profits increase by 2 per cent in 2009 against the previous year.

What are the prospects for the industry in 2010?

The domestic paper industry is able to meet 60 per cent of domestic demand, with the remainder imported. Domestic producers are optimistic after gaining a growth of 2.14 per cent last year even after operating at full capacity for only seven months of the year.

This year, the industry is expecting to attain a growth in output of 10 per cent.

In the first quarter of this year, many pulp and paper mills will be put into operation with the aim of increasing domestic average consumption rate to 22kg per person.

But 2010 will also be rife with difficulties with the deregulation of coal and petrol prices and electricity rates. Viet Nam’s paper producers are also still unable to compete in capital, experience and technology with producers in other countries.

What does the industry do to gain the growth rate of 10 per cent in 2010?

Paper producers must reduce costs and increase the quality of their products. They should also improve management capacity because management is an important tool in production and development.

Sources of raw materials are a growing problem. Globally, 70 per cent of material for paper production comes from recycled paper, while the figure in Viet Nam is far lower. In 2009, Viet Nam consumed 2 million tonnes of paper but collected only 550,000 tonnes of paper to recycle into new paper products. A draft of policy on recycling will be submitted to the Government this year. — VNS