INDUSTRY IN VIETNAM

Assessing Vietnamese paper and developing strategies to increase competitive advantage of the paper industry in Vietnam and beyond



Assessing Vietnamese paper and developing strategies to increase competitive advantage of the paper industry in Vietnam and beyond

Introduction

Vietnam's first paper machine started operations in 1912, with a capacity of 2,500 tons a year (Le Chi Ai 1995: 57). In the 1970s before the Bai Bang pulp and paper mill was started, the three largest paper factories in North Vietnam were:

* Viet Tri, 10,000 tons a year capacity, built with Chinese assistance;

* a 5,000 tons a year capacity mill north of Hanoi and

* a mill south of Hanoi producing wrapping paper (Jerve et al 1999: 48).

In addition, there were more than twenty smaller mills producing a total of 12,000 tons a year (Jerve et al 1999: 48).

Today, Vietnam has 94 paper and board mills and 27 pulp mills, producing a total of about 360,000 tons of paper and board a year (PPI 1999).

The three largest pulp and paper mills in Vietnam today are:

* Bai Bang (55,000 tons a year) in the northern province of Phu Tho;

* Tai Mai (48,000 tons a year) in Dong Nai province in the south of the country; and

* Dong Nai (14,000 tons a year) also in Dong Nai province.

The largest single producer of paper products is the state-owned Vietnam Paper Corporation, Vinapimex. Vinapimex has 20 subsidiaries and 11 factories producing a total of about 170,000 tons a year (Export America November 2001: 5). In 1999, Vinapimex was the biggest loss maker in the country with nine of its member companies reporting a loss for the year (VDC online 2 February 2000).

In addition to paper mills, a series of mills around the coastal city of Danang, produce wood chips mainly for export to Taiwan and Japan.

These pulp, paper and wood chip mills compete for raw materials. In the north of the country, wood is transported from as far as 300 kilometres to the Bai Bang mill. The mill still suffers a shortage of raw material, which became worse in the late 1990s when a Taiwanese company built a wood chip mill at Hai Phong and offered to pay more than Bai Bang. Farmers harvested their plantations and sold the wood to the new mill. After 18 months the wood chip mill closed because of lack of raw materials (Fortech 1998: 17).

Plantation programmes in Vietnam started in 1956 (Fortech 1998: 3). By 1975, 219,290 hectares had been established, according to Nguyen Ngoc Lung of the Department for Forestry Development (Fortech 1998: 3). In the next ten years, official figures claim that 563,120 hectares were established, but Lung points out that survival and growth rates were poor (Fortech 1998: 3). Between 1986 and 1992, there was an increased focus on plantations, often with funding from international aid agencies. In 1992, the government developed Programme 327. (See section on Programme 327, below.)

The Vietnamese government is currently carrying out a large scale "reforestation" programme and ...