Viet Nam is the world's top exporter of wood chips, with exports of six million every year in recent year. Wood chips are used in pulp production, which could attract foreign investment. — File Photo

HCM CITY (Biz Hub) — Viet Nam has yet to have a modern, large-scale pulp production chain, despite the approval of several projects, Vu Ngoc Bao, general secretary of the Viet Nam Pulp and Paper Association told Vietnam Economic Times .

Viet Nam is the world's top exporter of wood chips, with exports of six million every year in recent year. Wood chips are used in pulp production, which could attract foreign investment.

Investment in the paper and pulp industry requires huge expenditures for advanced technologies, and a long period to recoup the investment. As a result, investors have been reluctant to pour money into the industry because of strict regulations on environmental protection.

Many large pulp and paper factory projects worth thousands of billion of dong have yet to be put into operation.

Phuong Nam pulp production factory, invested in by Tracodi Company in 2006 with capital of VND4 trillion (US$177.78 million), for example, had to stop operating because of conflicts between the mill and farmers about prices, and frequent machinery breakdowns.

China's Lee & Man Group's pulp production factory in Hau Giang Province, with investment capital of $1.2 billion, was expected to have the biggest capacity in the country of 150,000 tonnes of pulp per year and 420,000 tonnes of paper.

However, construction stopped as there had been no environmental feasibility study of the project.

Last year, the chairman of Hau Giang People's Committee sent a document to restart the project and ensure construction by the end of this year. But it is not expected to begin by that time, according to industry insiders.

The companies Tan Mai Paper, Dong Nai Paper and Binh An Paper, formerly the pride of the Vietnamese paper industry, have also faced problems.

After equitisation, the businesses were merged, forming the Tan Mai Group Joint Stock Company, the largest of its kind in the country.

The company invested $3 million in building a paper production facility, but had to declare bankruptcy because of inefficient operations. — VNS