Stricter environment rules and fiercer competition threaten small paper firms

“Things will be different in the near future and paper enterprises will have to make changes as the punishment against those violating environmental regulations will be significantly harsher in 2018,” Bao told the event held to announce an exhibition on Vietnamese paper and pulp set to take place in June next year.

The Ministry of Industry and Trade is developing and collecting comments on a set of environment protection criteria for paper production.

Bao said the criteria, many of which are too strict for small producers to follow, are expected to be applied from next year.

Also from 2018, many large-scale paper projects, which have annual output of hundreds of thousands of tons each and are mostly owned by foreign investors, will start operation.

Those facilities are estimated to raise the country’s total paper capacity by three million tons, he added. 

Paper supply for the domestic market will rise obviously but Vietnam still has to import around 400,000 tons of Kraft paper as local producers are not yet able to make this type of recycled paper, which is mostly used in the industrial sector.

The country currently imports 1.6 million tons of paper of different types a year.

Given the situation, large enterprises will dominate the market, and in order to maintain their operation, small firms should focus on certain market niches which big companies ignore, he said.

Mac Cam Phuoc, sales manager of Valmet Co Ltd, said foreign companies from Thailand, China, and Taiwan are holding majority market share for packaging paper and pulp while only a few domestic firms such as An Hoa Paper Joint Stock Company and Vietnam Paper Corporation are given slots in the playing field.

Foreign enterprises use advanced European technologies, which help lower their production costs as they can save labor and material costs, resulting in higher profits. In addition, such technologies are environmentally friendly, he said.

Meanwhile, many local enterprises use equipment made in China that often causes environmental pollution, but it is difficult for those firms to change their production lines as they do not have enough resources due to their low profits.