Domestic paper and packaging firms face a shortage of raw materials and a slump in both domestic and export demand.

Many packaging manufacturers said orders have fallen by 30-50 per cent year-on-year since the start of February.

They mainly supply firms in sectors like garment and textile, footwear and others to package for export, and demand has fallen since the latter’s exports have, they said.

Nguyen Van Thanh, director of Phu Nguyen Thinh Phat Packaging Production, Trading and Services Co., Ltd, told Sai Gon Giai Phong (Saigon Liberated) newspaper: “Orders decreased by about 30 per cent. The reason is that the company mainly supplies packaging to export enterprises. Recently, their exports have run into difficulties due to the pandemic.

“Many garment enterprises have cancelled their long-term contracts [with us], and signed seasonal contracts instead for tens of thousands of packaging boxes each. A number of others stopped order because they have no new export orders.”

Investment in the pulp industry remains modest, causing heavy reliance on imports.

But the COVID-19’s spread to many countries and territories has made it hard to import pulp, according to the Viet Nam Pulp and Paper Association (VPPA).

The association said many scrap paper suppliers abroad have cancelled their orders.

Dang Van Son, the VPPA’s deputy chairman and general secretary, said: “According to our assessment, large manufacturers have very small stocks of raw materials, enough only for one to two months. Many small and medium-sized enterprises have run out of inventory.”

If the situation prolongs, many firms have to close down, he said.

Also according to the VPPA, the prices of raw materials have increased by VND200,000-300,000 per tonne, sending manufacturing costs surging.

Many Vietnamese paper producers are small, mostly with a capacity of less than 30,000 tonnes per year, and use old equipment, and so they are not very competitive, it said.

Most local firms focus on normal packaging paper and export it, and the country has to import over a million tonnes of high-class coated packaging paper, high-class copy paper, coated printing paper, and other special kinds of paper every year, the business group said.

Firms therefore need to adjust their product structure, it said.

It is currently trying to help businesses find raw materials and funding to help them maintain production.

It has also petitioned relevant ministries to streamline import procedures and speed up customs clearance to help businesses quickly source raw materials.

It has also urged the Ministry of Transport to help reduce logistics costs for paper companies. — VNS