Viet Nam's Pulp & Paper Industry Comes Alive

Implications: Viet Nam has SE Asia's fastest growing economy, growing at (conservatively) 6%/year and by other estimates at up to 8% through 2010 when the government estimates it will require 2 milliion mt of fiber.  914,000mt of paper will have to be imported here in 2007 as well as importing 150,000mt of market pulp.  Their paper industry in many cases uses non-wood fibers such as bamboo, bagasse, kenaf and rice straw.  However, many high strength papers will require more stronger, more sophisticated pulps.  Domestic producers only meet 37% of current demand. The question remains: who will the investors be who finance the many pulp and paper mills needed if the country is to be self-sufficient? The Government has just been reorganized with a number of ministerial changes.  To many people this signals a chance in Hanoi's attitude toward outside investment and also the need to develop a domestic industrial base.

Analysis: Viet Nam has 84 million people and an old, out-of-date paper industry made up of salvaged paper machines 100 years old.  The government is planning to invest nearly US$6 billion into the development of a modern pulp & paper industry between now and 2020.  They have already planted 120,000 hectares of cajeput trees (an acceptable papermaking fiber plus leaves that produce medicinal oils and a spongy bark used as a packing material).  The climate is very conducive to planting fast growing eucalyptus and acacia trees.  China's Lee & Mann recently announced plans to build a containerboard mill that will produce 320,000mt/year of containerboard and 150,000mt of unbleached pulp.  They hope to have the mill up and running by the last quarter of 2008 or the fist quarter of 2009.  The company pointed out that Vietnam is a relatively low cost country with attractive shipping costs to nearby potential customers and with a climate that supports fast growing trees.  To meet the projected need of 2 million mt by 2010 a number of multinational companies will have to invest in as many as 12-15 major facilities in the very near future.  These would seem to be excellent investment opportunities.