The globalization of the pulp and paper industry – Part III

By Chris Lang, MSc Thesis, Oxford University, 1996.

There are three large state owned pulp and paper mills in the Vietnam, Bai Bang (55,000 tons per year) in Vinh Phu province in the north of Vietnam, Dong Nai (20,000 tons per year) and Tan Mai (48,000 tons per year) both in Dong Nai province in the south. In addition there are over 200 small scale pulp and paper mills around the country (Pesonen 1995: 17), based on Chinese technology in the north and on German, British, French and Taiwanese technology in the south (Flashtec 1995). In 1994 Vietnam’s total pulp and paper production was reported internationally at 113,000 tons with a total capacity of 260,000 tons per year (PPI 1995b: 63). Estimates from within Vietnam however indicated production of 160,000 tons (Le Chi Ai 1995: 57).

The supply of raw materials is becoming an increasing headache for the Vietnamese pulp and paper industry, a situation which is exacerbated by the export of wood chips to Japan and Taiwan, a trade anticipated to reach 60,000 tons in 1995 (VN 1995c: 5). Ahlback (1995: 228) describes a series of wood chip factories along the Vietnamese coast, the largest set up as joint ventures with companies from Japan, South Korea and Taiwan, but adds that policy may be amended in future to allow only the export of finished products.

Vietnamese pulp and paper mills operate at well under capacity resulting in many mills running at a loss. Production costs in 1994 of a tonne of Vietnamese paper were US$200 higher than European or US costs, and cheap paper has been dumped on the Vietnamese market from Eastern Europe and Russia. Mills have been forced to close for several months in recent years due to shortage of materials (VN 1994c: 1).

Despite these problems, Kari Pesonen a Jaakko Pöyry consultant, is optimistic about the potential for expansion of Vietnam’s pulp and paper industry in the future, and views Indo-China as “in the midst of a region deficit in fibre … [and] with its large forest resources, has the potential to becoming (sic) a more visible player in the Asia-Pacific pulp and paper business” (Pesonen 1995: 12). According to a report produced by the Jaakko Pöyry subsidiary Interforest AB, domestic paper consumption is low and “production is thus not able to meet demand”, since the real demand for paper in Vietnam is “generally accepted as equal to the ‘allowed’ supply” (Interforest 1995: 21). Pesonen anticipates that the additional production potential in Vietnam will not be aimed at producing products for the domestic market, but for the export and packaging markets. Even assuming a ten per cent growth rate in paper consumption between 1995 and 2005, Vietnam’s total growth in demand would be 150,000 tons (Pesonen 1995: 17), a total which could be met by operating the existing mills at capacity production.

Bai Bang pulp and paper mill

When it was launched in 1974, the Bai Bang paper mill in North Vietnam was SIDA’s largest single development aid scheme, at an initially estimated cost of US$170 million (World Wood 1974: 3). The proposal for the mill originated in negotiations between Olof Palme (the Swedish prime minister) and Ho Chi Minh in the late sixties (Virta 1996). Palme was outspokenly opposed to US involvement in Vietnam and saw a large scale aid project as a way of expressing this opposition.

Jaakko Pöyry played a significant role in the history of the mill, their initial involvement being a feasibility study produced in 1974. This study recommended 14 conditions which should be met before the construction of the mill commenced (Virta 1996). Palme and SIDA were determined to go ahead quickly however, and a Swedish company, WP Systems AB, were hired to build the mill (Virta 1996), and another Swedish company, Silviconsult won the contract to coordinate the associated silvicultural programme (World Wood 1977b: 35).

The Bai Bang paper mill has a capacity of 55,000 tons per year, which although small by Swedish standards, is huge for a country with Vietnam’s paper consumption, and even today Bai Bang is the largest paper mill in Vietnam. Associated with the project was a felling and reforestation programme, as well as the construction of a power plant, roads, bridges and a harbour on the Song Lo river, next to the plant (World Wood 1977a: 3).

The benefits to Swedish industry were immediately apparent. Orders for machinery went to Swedish companies, the largest for two paper machines at around US$10 million to AB Karlstad Mekaniska Werkstad. Other Swedish companies involved were Beckers, Saab-Scania, Kockums, Volvo, Atlas-Copco, NJA, Asea and Platzer Bygg AB (World Wood 1976b: 3). The project brought with it over 500 highly paid consultants and technicians during project implementation, who were provided with housing for their families, schools for their children, and a hospital (Usher 1993).

The cost of the mill exceeded estimates, and by January 1977, SIDA calculated that the total cost would be US$263.75 million (World Wood 1977a: 3). Rising costs were not the only problem involved with the construction of the mill, and by late 1979 only the foundations had been completed. The political importance of the project (as well as the rising levels of tension associated with the construction of the mill) is indicated by the fact that all project and technical meetings at this time were chaired jointly by the ambassadors of both Vietnam and Sweden (Virta 1996). At this stage SIDA approached Jaakko Pöyry privately and a deal was reached whereby a consortium of Swedish companies was created to build the mill. Scanmanagement, as the consortium was named, was 60 per cent owned by Jaakko Pöyry, and a condition of Pöyry’s involvement was that the contract for the silvicultural element of the project should go to the Jaakko Pöyry Group (Virta 1996). Jouko Virta, of Jaakko Pöyry Consulting was the first president of Scanmanagement.

The first paper machine was started in late 1980, the second in 1982 and the pulp mill later the same year (Hamilton 1982: 12). In its first few years after completion Bai Bang seemed doomed to join the list of development aid boondoggles. Vietnam did not have enough qualified technicians to run the mill, and spare parts and chemicals had to be imported, which the Vietnamese government could not afford (Sayer 1991: 239). The demand for foreign currency thus created was to be met by exporting paper, and SIDA was actively involved in promoting this export trade to with Korea, Taiwan and Japan (Virta 1996). Sayer even reports that Sweden bought up paper to give as aid to Ethiopia, although Virta denies that Sweden ever actually purchased the paper directly (Sayer 1991: 239, Virta 1996).

Raw material supply

One of Jaakko Pöyry’s recommendations from their 1974 study, was that a full resource inventory be completed before construction of the mill was commenced (Virta 1996). However, even with Pöyry’s full involvement from 1979, it was not until 1984/5 that the first inventory was carried out. A second in 1986/7 confirmed the seriousness of the raw material shortage (Cossalter 1988: 7).

Several factors were overlooked in the initial overestimation of available raw material, because of the political urgency of the project in the mid 1970s. Some could not be foreseen, such as the loss through flowering of large areas of bamboo stands, but other factors were specific to the use of timber in the region. Wastage of up to 45 per cent of standing volume was common, due to poor harvesting techniques and transport losses, and the amount of wood required for non-industrial (fuelwood, construction wood) and industrial (two other pulp and paper mills) uses in the region was underestimated. In addition a large quantity of timber from the region was sold in the Red River delta area around Hanoi (Cossalter 1988: 4).

The Bac Yen Union of Forestry and Industry was created in 1979 to supply the Bai Bang pulp and paper mill, originally from a concessional area of 200,000 hectares of forest land in Ha Tuyen province (Larsson and Birgegard 1985: 6). In 1983, the raw material area, which supplies the mill was expanded considerably, to include a gross area of 1.2 million hectares in Ha Tuyen, Hoang Lien Son and Vinh Phu provinces.

It became increasingly apparent to SIDA’s consultants during the mid 1980s that the mill’s wood requirements make up only a minor part of the total volume of wood harvested in the raw material area. Local demand for non-industrial wood meant that of 10 logs harvested perhaps only one or two would eventually arrive at the mill (Ohlsson and Byron no date: 12).

A further study carried out in 1985 investigated the working conditions in the forestry brigades cutting forests to supply the mill. The report is shocking, and documents forced labour, poorly paid workers uprooted form their families and villages, ill health, poor housing, poor education, and “deplorable” child care facilities (Larsson and Birgegard: 1985). One of the ironies of the project is that none of the forestry workers interviewed in the study had received any paper at all from the project (Larsson and Birgegard 1985: 23).

Subsequently, in June 1986 a new forestry project, the Plantation and Soil Conservation Project, was started, funded jointly by SIDA and the Vietnamese MOF. Interforest AB, a subsidiary of Jaakko Poyry won the contract to oversee the project, the aims of which were to:

supply the mill with raw material;
increase production of fuelwood for local needs
contribute to the ecological balance
engage the local population in tree growing (Cossalter 1988: Annex 1).

The aim of supplying the Mill with raw materials still took precedence however, and the project aimed to establish 6,500 hectares per annum of fast growing species, predominantly monocultures of Eucalyptus camaldulensis and Styrax tonkinensis. The programme for planting Pinus caribaea was severely reduced, due to damage caused by insects and fungi (Stahl 1990: 13).

Eucalyptus camaldulensis was selected, not on the basis of extensive trials, but because the Mill existed and the demand for the raw material was urgent. As one consultant explains:

It is often necessary to start large scale plantations without having complete and reliable local information about what to plant. Industries cannot be left standing with little or no wood while the foresters wait for perfect information … In this the Vinh Phu plantations are no exception (Stahl 1990: 8).

Thus the choice of Eucalyptus camaldulensis was based as much on ignorance of indigenous tree species, as on its suitability in the raw material area, as Stahl states:

There is no international, and for that matter only limited Vietnamese experience, to fall back upon when it comes to Styrax forestry. Any information must be found through Project research. This is problematic, since our local research organisation is not well organised for styrax research, which mainly is the duty of a research organisation outside Project control (Stahl 1990: 8).

In practice trial plantations had been established, but they had either disappeared or been severely damaged (Cossalter 1998: 1). The choice of Eucalyptus camaldulensis as a lead species relied heavily on a species trial established in 1979, but illegal cutting by the local villagers, grazing of buffaloes, termite attacks and weed competition meant that the plots were seriously damaged or had disappeared entirely before the age of five. In addition measurements were irregular and data was lost. “In 1984 the only data available on this trial were the measurements at age 1 and 2 in all four sites and the measurements at age 5 in Thanh Ba which was the site with the poorest potential” (Stahl 1990: 24).

A similar fate befell a trial established in 1985, involving three provenances of Eucalyptus camaldulensis, and seven other species. Illegal cuts and damage caused by buffaloes meant that the trial could not be statistically evaluated (Stahl 1990: 26).

These problems, faced by the consultants in establishing even small trial plantations in the raw material area, illustrate an important dynamic in the Vietnamese reforestation programme. The assumed “empty” forest land is often not at all empty, but is being used for a variety of purposes important to the communities living there. Although they may be largely denuded of tree cover, the “bare hills” are of great value as a supply zone for fodder and fuel and for temporary crop production (Shanks 1993: 82). Conflicts therefore emerged concerning land use when such land was earmarked for industrial plantations, the expression of which were plantations destroyed through grazing and illegal cutting (Ohlsson and Byron no date: 12).

The attitude of the villagers and forestry workers to the project at the time can be gauged from statements such as the following:

Many Swedes are good … but the problem is that they see one solution only and that everything has to be done their way and quickly … not until afterwards, when everything has gone wrong do they want to listen to us … (Employee in the Bac Yen Union in Larsson and Birgegard 1985: 1).

A change in direction?

The project was initially drawn up at the level of international diplomacy, with the aim of sending a message to the US, and as a gesture of solidarity with the Vietnamese government. The welfare of the villagers and workers on the receiving end of the project was very much a secondary consideration. This is further illustrated by the fact that attempts to set up village plantations were often unsuccessful at least partly because villagers were given poor quality seedlings which had been rejected for industrial plantations, and much of the land available to them for planting was infertile, compacted and highly eroded (Midgley 1989: 36).

The difficulties associated with the establishment of large scale industrial plantations eventually led to a change of direction in SIDA’s aid. Swedish contributions to the Bai Bang pulp and paper mill finished on 1 July 1990 (SIDA 1989: 38), and in June 1991, the Plantation and Soil Conservation Project was terminated, to be replaced by the Swedish-Vietnamese Forestry Cooperation Programme (Stahl 1990: 18), and Interforest won a new contract with SIDA.

The Forestry Cooperation Programme covers five provinces (the existing raw material area, plus Ha Giang and Lao Cai) and aims to help enable farming families and organizations to plant trees on land recently allocated under the 1988 Land Law (Shanks 1993: 85). Instead of the target driven social forestry afforestation projects (under the Plantation and Soil Conservation Project), involving seedling distribution centrally controlled nurseries, the new project focussed on farm-level forestry. Projects were started in a few pilot communes and villages in each province, with PRA exercises lasting several days before projects started. Such exercises revealed farmer demands for a wide variety of tree species, and community nurseries were established to supply seedlings (Shanks 1993: 89-90). Meanwhile the mass seedling delivery system was maintained, outside the farm-level forestry project pilot villages. In some cases, both systems exist side by side (Shanks 1993: 92).

The Forestry Research Centre, established by SIDA in association with the mill in 1976, initially concentrated on nursery techniques, and trial plantations for industrial tree species, but has gradually shifted its focus to include a wide range of rural development research (Hoang Son 1994: 5). This change is reflected in recent issues of the Forestry Research Newsletter (published by the Forestry Research Centre) which include reports on surveys of fruit and pharmaceutical trees, high value timber trees, planting indigenous tree species, bee keeping, pig breeding, mushroom production, trials measuring soil erosion on agroforestry systems involving cassava farming, as well as growth trials of Eucalyptus urophylla, species and provenance trials of 28 species of Eucalyptus and 17 of Acacia and vegetative propagation of Eucalyptus.

The future of Bai Bang

The problems associated with the Bai Bang pulp and paper mill are far from solved however. Demand for the mill’s products was reduced in the early 1990s by cheap smuggled paper products, including writing and toilet paper, from China (Kanwerayotin 1995: 3). Last year, a trial plantation of clonal Eucalyptus camaldulensis in Gia Thanh commune, Vinh Phu province was damaged in its fourth year through cutting by villagers (Nguyen Sy Huong 1995: 12).

The demand for raw materials to feed the Mill has led to large scale encroachment into natural forest and into neighbouring provinces. An independent EIA, carried out in 1993, reports that in the 10 years since the mill was completed, more than 80,000 hectares of mostly natural forest was cleared to supply the mill (Le Thac Can et. al. 1993). Since 1990 the development of the market economy has created a climate in which people can sell bamboo and wood to the mill at a competitive price, which has led to an uncontrolled cutting of bamboo and trees from village woodlots and still further deforestation (Le Thac Can et. al. 1993).

Recently pulp has had to be imported to keep the mill going, and in 1995 around 30 per cent of the raw material supplied to the Mill was in the form of imported pulp, leading to an increase in paper production costs (VN 1995b: 2). A supply of Vietnamese seed for new plantations had still not been established by 1993 (despite 10 years of research into growing Acacia mangium, Eucalyptus camaldulensis, and E. urophylla), and the cost of importing seed in 1993 was estimated at US$60,000 (Nguyen Thai Ngoc 1993: 15).

A 1994 report states that:

Bai Bang Paper mill has been in operation for 14 years and has been operating at a fraction of its capacity. The Mill was running at a loss. This is all the more remarkable given the fact that during more than 10 years they have received government subsidies and SIDA aid, 45,000 hectares of plantations assisted by SIDA have been established (costing US$680 per hectare) and the paper industry presently benefits from a total ban on paper imports, up from 40 per cent import tax in previous years. The current wholesale price at the millgate for writing-paper is VND 7.7 million (US$700) per MT compared to the international market price of US$625 CIF-Bangkok (Frankefort 1994: 23).

The total grant to date from SIDA to exceeds US$1 billion (Flashtec no date), and since 1990 when the mill was handed over to the Vietnamese Ministry of Light Industries, no additional investment has been made in the paper mill (Kanwerayotin 1995: 3). However, the GOV is currently looking for foreign funding to expand the Mill to an output of between 70,000 and 100,000 tons per year (SCCI 1994). The supply of raw materials remains an unsolved problem however.

Commercial fast growing plantations

To feed the demand for wood chip exports from Vietnam, several industrial joint ventures are currently in the pipeline. Very little information is available to the public on these projects and the companies involved do not reply to requests for information. However, once the projects are underway, some evidence of the impact of these plantations, and the conduct of the corporations involved has become available.

Nissho Iwai / Oji Paper

Oji Paper, Japan’s second largest paper manufacturer, established trial plantations at two forest enterprises in Song Be province in the south of Vietnam in 1991. The aim was to establish species and provenance trials leading to a US$5.7 million industrial plantation covering 13,000 hectares to supply wood chips for export (VN 1994b: 1). The trial plantation project was run in conjunction with the Forest Science Institute of Vietnam, and is the initial stages of a joint venture between Oji Paper Company Limited and the Ho Chi Minh City office of the Japanese trading house Nissho Iwai Corporation (VN 1994b: 1). The joint venture company is the Dong Phu Plantation Forest Company of Vietnam.

The land allocated for the trial plantations was previously forested, and a significant proportion of site preparation costs went on clearing the existing vegetation. Once the trial was planted, termites proved to be a problem and 14 per cent of trees were destroyed in the first year. Termites were eradicated through spraying DDT, a practice in accordance with the joint venture company’s guidelines, drawn up especially for the establishment of Acacia and Eucalyptus plantations in Vietnam (Dong Phu 1994: 8).

However, the cost of land in Song Be province increased dramatically during the species and provenance trials, and the site of the commercial plantation has been relocated. In May 1995, approval was given for the plantation to be established in Binh Dinh province (Saigon Times 18-24.5.95), where the soils and climate are quite different, therefore making the trials somewhat irrelevant. Oji Paper plan to retain the trials in order to provide a seed nursery for future plantations in Vietnam.

Itochu Corporation (source Nihon Keizai Shimbun 1993)

Itochu Corporation (formerly C. Itoh & Co.), one of Japan’s largest general trading companies has acquired 5,000 hectares of state owned land in Vung Tau province in southeast Vietnam, with the aim of establishing a wood chip supply to Japan. Itochu has set up a joint venture with Southern Forest Resource, a Hong Kong speciality trader, which will carry out the planting and wood chipping operations. Acacia will be planted at a rate of 1,000 hectares per year, and the first harvest will be in 1997. Chips will be processed in Vietnam and sold by Itochu Corporation to Chuetsu Pulp Industry Co. Ltd. a medium sized Japanese paper manufacturer which is part of the Oji Paper group.

Itochu’s exports of wood chips from Vietnam are expanding rapidly. In 1992 Itochu traded the first imports of wood chips from Vietnam to Japan, with shipments of over 25,000 BDU tonnes of wood chips. By 1998 Itochu is aiming to import around 80,000 BDU tonnes from Vietnam.

Kien Tai

The Kien Tai project is a joint venture between the Taiwanese consortium Central Trading and Development (CT&D) and the Vietnamese provincial authority of Kien Giang province, to establish 60,000 hectares of fast growing Eucalyptus trees for export as wood chips to Taiwan (Holmes 1994: 12). The site consists of acid sulphate soils in the Mekong delta, and serious problems have been created in the establishment of the plantation through poor site preparation. In constructing mounds for the trees, the yellow sulphite layer in the soil has been exposed, and during the wet season, flooding and run off from the site has led to the acidification of local canals, killing fish and making water undrinkable (Poynton 1996).

Floods in the region are around 1.5 to two metres deep each year, and at around three years old many of the trees have either stopped growing, died, or fallen over (Poynton 1996). Problems of poor site preparation and flooding have been exacerbated by poor nursery techniques, poor quality seeds and poor maintenance of the plantation once the trees are planted. Far from the land being put into productive use, the soil structure has been damaged, and local water courses poisoned.

Two highly paid Australian consultants (who previously been employed by SIDA at the Bai Bang project) were contracted to attempt to improve the situation, but left the project after their recommendations were not carried out on site, having been consistently overridden or ignored by the Taiwanese managers of the project.

Australian aid to the Long Xuyen Quadrangle

In the late 1980s, the Vietnamese authorities in An Giang province requested Australian government support for the development of a reforestation project in the Long Xuyen quadrangle in the Mekong delta (AIDAB 1991). In order to avoid breaching the US led trade and aid embargo with Vietnam, Australia funded the project through the UN backed Mekong Secretariat, based in Bangkok. The project started in 1991 aimed to investigate the potential reforestation of 70,000 hectares of seasonally inundated acid sulphate soils.

Before the US war, the area had been largely covered in Melaleuca forest but during the war it was heavily bombed, sprayed with defoliants and drained, leaving a dry acidic grassland (Archibald and Le Dien Duc 1990, Poynton 1995). During the late 1980s the GOV promoted a transmigration programme involving moving Kinh people from towns in the delta to the Long Xuyen quadrangle, partly hoping to boost food production by utilizing currently under used grasslands, but also wanting to improve national security by populating the area adjacent to the Cambodian border.

Rice crops largely failed after the first year because of the acid soils (Poynton 1995), and along several roads in the region are the abandoned timber and bamboo huts of families who have moved back to the towns.

The project initially aimed at utilizing Eucalyptus “for commercial wood production” and Melaleuca “to address environmental issues” (Mekong Secretariat 1991: 105). However, as implemented, the five year project aimed to determine the best species and provenances for farmers to plant on land allocated to them. Species and provenance trials involving Eucalyptus, Acacia and Melaleuca were established at several sites in the region (Poynton 1995).

The project focussed on establishing:

(a) which multiple resource use models based on artificial forests together constitute an effective base for sustainable development on the inundated soils of the quadrangle;

(b) what are the likely environmental and social consequences;

One method was to develop a model involving farmers to develop the difficult soils of the region. Trial plantations were established using village labour, without the use of machinery, thus providing a vital source of cash income in the villages, and improving the popularity of the project locally. There was little or no damage to any of the project’s trials. Analyses carried out by the economics department of Can Tho University, of the various species at three years old, predicted that for farmers, Melaleuca cajuputi of Vietnamese provenance would give the best returns after ten years. Eucalyptus was less economical because of the high inputs needed to establish the trees, particularly the site mounding required to reduce flood damage (Poynton 1996).

Of course, the project’s research into Eucalyptus establishment was of interest to commercial plantation projects such as Kien Tai. In fact this was an explicit aim of the project documentation which describes the need to identify suitable sites, species and provenances for planting and to determine the economic, socioeconomic and environmental consequences of a “large-scale commercial forestry venture” (Mekong Secretariat 1991: 105).

In practice the large-scale commercial forestry venture is being established at the same time as the aid programme. The Kien Tai project and the Mekong Secretariat project are neighbours. However, Kien Tai appears to be such an ecological disaster that any attempts to improve the situation (from whatever source) are of immediate (if possibly only short term) benefit to local farmers and fishers. In addition, areas of existing Melaleuca forest slated to be cleared for the Kien Tai development were saved, at least temporarily, largely through the negotiations and involvement of Scott Poynton, the Australian forester involved with the Mekong Secretariat’s project.

The overseas involvement in the Long Xuyen aid project finished in November 1995. An illustration of the problems associated with such aid (even on its own terms) is given with the construction of gravel stand out beds for seedlings at Chi Lang nursery as part of the project. Damping off was perceived as a problem in the nursery, and the stand out beds allowed better air circulation thus reducing the likelihood of fungal damage to the seedlings. Although these beds were used successfully in the 1994 growing season under the project, the following year the beds were unused, and the nursery staff had returned to placing seedling potting bags directly on the soil. The gravel beds stood empty, and were seen as somehow “belonging to the Australian” and therefore not to be used unless “the Australian” was present.

Mekong Secretariat descriptions of the project before it was implemented reveal the underlying problem. For example:

Although farmers have developed and applied small-scale strategies for reclamation successfully, which allow for productive soil use with a minimum of negative side effects, these strategies cannot be transferred easily to different locations as they were developed on a trial and error basis, and must be complemented by a thorough scientific assessment of the relevant soil processes (Mekong Secretariat 1990: 14)

As designed, the project concentrated on trial plantations, based on outsiders’ expertise, rather than the knowledge gained by farmers through trial and error. In practice, farmers’ knowledge was incorporated into the running of the project, otherwise the project would cease to exist once the foreign advisors withdrew. It remains to be seen whether in the long run, the results of the trials will be of interest only to industrial forestry projects, or whether the benefits can in fact be passed on to farmers and villagers.

Conclusion

The international pulp and paper industries “circle of friendly opinion” has certainly reached Vietnam. Through international aid projects, policy consultation exercises and political pressure from the World Bank, Vietnam’s forest policy has been moulded to suit the needs of the North. Reforestation, cloaked under a green mantle is an important part of Vietnam’s forest policy and the US$70 million World Bank project will doubtless include a large reforestation component.

The scene for development has been set in negotiations in Hanoi, Washington, Tokyo, London and various other capital cities of the world. Reforestation has been declared a necessity for Vietnam, and is being planned to take place on a largely industrial scale regardless of the needs of farmers, villagers, or even the Vietnamese economy in the long run. Commons will be eroded, shifting cultivators resettled and traditional communities and ways of life undermined or destroyed.

The expansion of the pulp and paper industry into Vietnam (or the South generally) would not be possible without subsidies, directly in the form of international aid and indirectly through tax breaks written into forest policy, and a land law sympathetic to the needs of large scale foreign investment.

The Australia-Vietnam Forestry Development Project provides a final illustration of the subtle ways in which the pulp and paper industry networks function. The project ran from 1989-1993, and involved the placement of an Australian OSB volunteer in a FSIV research centre. Seeds were provided by the Australian Tree Seed Centre for plantations and the distribution of 1.2 million seedlings to farmers, forestry workers, schools and hospitals. “Community planters” were encouraged to grow the trees on a rotation of about seven years “to realise the best economic returns and the ecological advantages of well established tree cover” (Kelly 1991: 5-6). The timber was primarily sold as pulpwood.

In August 1991 the project paid for a three week study visit to Thailand, hosted by the Royal Forestry Department (RFD). The itinerary included the Office of Private Reafforestation, Bangkok; RFD, Bangkok and Chiangmai; the Teak Improvement Centre, Lampang; the Asean-Canada Forest Tree Seed Centre; and a Eucalypt sawmill and furniture factory. Finally an “impromptu” visit was arranged at the head office of the Soon Hua Seng Group. The report of the visit notes that “The company is very interested to develop contacts in Vietnam, and we found ourselves dining in an exclusive Bangkok members only club” (Kelly 1991: 15).