Thailand has emerged as a pulp & paper powerhouse

Implications: Thailand is surrounded by countries needing to import fiber to meet their domestic paper & board requirements - Laos, Cambodia, Viet Nam, Malaysia, Myanmar Republic and of course China and India.  With low labor rates, fast growing plantations and favorable transportation costs, this country is poised to become even bigger in pulp and paper production. The Government is very supportive - having abolished control of pulp exportation, providing tax exemptions for imported machinery and production equipment, offering the producers income tax exemptions for 3-8 years and increasing import taxes from 1 to 10% to protect local production. The country has grown rapidly to where it has 6 pulp mills and 60 paper mills.   All are profitableor close to being profitable.  There is need for additional expansion since the Government foresees their domestic needs tripling between now and 2015.   Considerable investment will be needed.

Analysis: In 2007 Thailand's economic growth is projected to be in the range of 3.5-4.5%.   There is growing domestic demand driven by manufacturing growth and rising living standards.  But export growth is also expected to be robust.  In 2000 the country was heavily dependant on pulp imports with 150,000-170,000mt imported every year.  Not only did the pulp production expand (by 2009 it will reach 4 million mt) but the quality increased to the point where it is now fully competitive.  It is now exported to 30 different countries.  Profits have been very respectable from each of the major companies like Thai Cane Paper (TCP) a major kraft paper producer, Phoenix Pulp & Paper (PPPC)-a leader in the production of short fibered pulps such as eucalyptus, bagasse and bamboo and the largest - Siam Pulp & Paper who is a producer of both pulp as well as printing & writing papers.  The other major producer is Advance Agro (AA) who produces uncoated printing paper.   One of the country's major engineering companies, King Wan Corporation has announced plans to enter into a joint venture to build yet another pulp mill.
These mills all draw their wood supplies from plantations in the northeastern part of the country which are being judiciously expanded.  The Government estimates 20 million hectares of eucalyptus plantations will be needed to supply the needed 55 million cubic meters of wood needed by 2015 (currently their production is at 18 million cubic meters).
The Government has provided considerable incentives to promote expansion including tax exemptions on imported machinery, income tax exemptions for producers, taxing pulp, paper and board imports, eliminating controls on exports and eliminating taxes on all pulp exports.
Thailand's non-wood pulps are becoming increasingly popular among environmentally conscientious customers all around the world who want any fiber that does not come from trees.  This has made the country's bagasse (from sugar cane), kenaf and bamboo pulps in short supply and selling for premiums over other hardwood pulps.
The pulp, paper and printing industry is expected to continue to grow since the Government is determined to boost exports and promote the country as a printing hub before 2014.  The country's economic growth is anticipated to surge by 5.0-6.0% and it is hoped the pulp and paper industry will be a strong contributor.