A worker transports paper rolls at Xuong Giang Paper Factory in the northern province of Bac Giang. The local paper industry will face fierce comptition when the ASEAN Economic Community is established at the end of this year. — VNA/VNS Photo Vu Sinh

HA NOI (Biz Hub) — Domestic paper businesses have been urged to improve their products' quality and competitiveness when the country enters into Free Trade Agreements (FTAs), experts said.

Statistics from the General Department of Customs showed that in the first five months of the year, the country's total turnover of paper and paper products was US$49 million, while its import turnover reached $174.5 million, or 3.5 times higher than that of its exports.

Another report from the Viet Nam Paper and Pulp Association revealed that last year, Viet Nam imported more than 1.5 million tonnes of paper and paper products, its exports were only 133,000 tonnes. This shows that the local paper industry is heavily dependent on imported materials.

Hoang Minh Thang, director of Tien Thanh Investment and Import-Export Company, told Hai Quan (Customs) Newspaper that Vietnamese paper businesses are small and have inefficient production lines, thus their product quality is not as good as that of other countries.

Nguyen Van Hai from Hai Tien Paper Company said they used to export paper products to Malaysia and Singapore. However, they have focused on the local market now as the products do not meet the standards required by the importing countries.

The upcoming FTAs would have an impact on our businesses, even though the domestic market has been stable, Hai said.

Ha Ngoc Hoa told the newspaper that the most important thing for the paper industry would be the establishment of the ASEAN Economic Community by the end of this year. The import tax on paper and paper products among the Community would be zero by 2018. This could create fierce competition for the local paper industry as half of the paper in Viet Nam was imported from the ASEAN.

Hoa said the tariff cut would create opportunities but would also challenge domestic businesses. However, local firms have not clearly understood the opportunities and challenges presented by FTAs as they have only focused on the domestic market so far.

For this reason Vietnamese paper enterprises should have a plan to improve their competitiveness.

Thang from Tien Thanh Investment and Import-Export Company said they planned to import cheap materials with good quality for production and distribution when the tariff drops to zero. In addition, they would upgrade their machines to increase productivity and improve quality.

The businesses will need support from the Government in terms of capital, infrastructure and equipment. — VNS