Domestic paper companies have been asked to invest in new production lines to save long term costs and improve quality.

HA NOI (Biz Hub)— Domestic paper companies have been asked to invest in new production lines to save long term costs and improve quality as a number of larger foreign firms have recently entered the industry.

The sector faces many common difficulties due to the struggling economy, which has resulted in several enterprises going bankrupt or ceasing operations.

However, the Ministry of Industry and Trade (MoIT) says that the sector still has potential for development, despite the ongoing difficulties.

The ministry said in the first five months of this year, the industry produced 860,000 tonnes of paper, an increase of 5 per cent year-on-year.

Its exports have also risen by 15 per cent to reach nearly 70,000 tonnes.

MoIT has forecast that paper consumption this year will be around 3 million tonnes, while currently domestic capacity is just 2.18 million tonnes.

Imports of paper have been on an upward trend over the past few months.

The ministry's figures revealed that paper imports this month are estimated at 130,000 tonnes, costing $114 million.

Paper imports in the first half of this year are 691,000 tonnes with a total value of $640 million, representing a 114 per cent year-on-year rise over the same period last year.

Indonesia, Taiwan and Singapore have been the main suppliers to Viet Nam's paper market.

However, Vu Ngoc Bao, General Secretary of the Viet Nam Paper Association said that production levels of pulp by domestic enterprises has seen a relatively high growth.

Bao said that several companies have invested in modern production lines, and pulp production last year reached 484,300 tonnes, an increase of 30 per cent over 2011. However, this only met half of the demand.

The sector lacks pulp and has to import it for $900-1,000 a tonne, while Viet Nam has ranked first in the world for exporting woodchips (used in pulp production) over the last two years.

Last year, the country exported 6 million tonnes of woodchips which could produce 2.7 million tonnes of pulp for the lower price of $110-120 per tonne.

The association said that in the first six months of the year, several foreign investors had launched projects to produce pulp in Viet Nam.

The world largest packaging producer, Nine Dragons Paper, announced it will build a new production line for the Chanh Duong Paper Company, with the capacity to produce 350,000 tonnes annually.

Lee&Man Paper Manufacturing Ltd has also built a paper production plant in southern Hau Giang Province. — VNS