Vietnam: Paper shortages, price increases, new mills and more plantations

22 Dec

Vietnam has an ever increasing area of monoculture eucalyptus plantations. Nevertheless, the country faces paper shortages every year.

By Chris Lang. Published in WRM Bulletin 137, December 2008.




Every year for the past decade or so, Vietnam has faced paper shortages. This year is no exception. In May 2008, Vietnam’s newspapers reported that publishing houses and printers were facing difficulties in buying supplies. The shortages were happening even though the country’s two biggest pulp and paper mills, Bai Bang and Tan Mai were operating at full capacity and paper imports had increased sharply during the first months of the year.

One possible explanation for the shortages was that importers were storing paper, waiting for the price of imported paper to increase before selling it. In March, one ton of Indonesian paper could be imported to Vietnam for US$650. By May, the price reached US$800. Meanwhile imports of paper from China decreased, increasing the potential demand for imports from Indonesia.[1]

In June 2008, publishers increased the price of books. Bestsellers like “The Endless Rice Field” by Nguyen Ngoc Tu increased in price by 20 per cent.[2]

In September 2008, the Ministry of Finance reduced the import tax on paper by between 7 and 12 per cent, depending on the type of paper.[3] The Vietnam Paper and Pulp Association’s position on the cuts is not clear. Several newspapers reported that the tax cuts were a result of proposals by the Association. But the Association’s secretary general Vu Ngoc Bao told the Vietnam News Agency that the “reduction would seriously affect local paper producers, who were having difficulties reducing production costs in face of rising material costs. Foreign giants such as Japan, China, the US and South Korea challenge the competitive capacity of local producers.”[4]

Meanwhile, the Association is lobbying for government subsidies to encourage domestic investment in the paper industry. The industry can currently supply about two-thirds of the demand for paper and the country is expected to import about one million tons of paper this year, an increase of 200,000 tons over 2007.[5]

A series of new pulp and paper mills are either planned or under construction in Vietnam. In September 2008, Pöyry won a contract to build a 250,000 tons-a-year pulp line at the Bai Bang pulp and paper mill in north Vietnam. The pulp line is due to start operations in 2010.[6]

Also in September 2008, the Tan Mai paper company got permission to build four new pulp and paper operations: a paper mill in Dong Nai province; a pulp and paper mill in Quang Ngai province; a pulp mill in Lam Dong province; and a pulp and paper mill in the Central Highlands of Vietnam. The projects will produce a total of 550,000 tons of paper and 460,000 tons of pulp per year.[7]

The Tan Mai paper company has established 10,000 hectares of plantations in Lam Dong province to feed its pulp and paper operations. The company is also carrying out a US$30 million plantation project in Di Linh district in Lam Dong province.[8] In May 2008, the Lam Dong Paper Materials Enterprise, part of the Tan Mai paper company, got permission to build a US$54 million “ecotourism resort” in Di Linh district. The Kala Lake Resort will include an “underwater complex, an entertainment area, park, golf course, hotel, top class restaurant and a trade village of the local ethnic minority”, according to the Vietnam National Administration of Tourism.[9]

In March 2008, Kontum province licensed a US$67 million project to establish plantations of 65,000 hectares of land.[10] The company behind the scheme, InnovGreen, has plantation projects in five provinces in Vietnam and aims to plant a total of 300,000 hectares with “high-quality plantations of acacia and eucalyptus” on what it describes as “vacant, unproductive land”.[11]

The company is using the Forest Stewardship Council (FSC) to greenwash its operations. “International forest plantation standards under the Forest Stewardship Council, a stakeholder-owned system for promoting responsible management of the world’s forests, will be applied,” InnovGreen chief executive officer Wu Dean said, about the company’s plantations in Nghe An province.[12] None of InnovGreen’s plantations are certified under the FSC system.[13]

Eucalyptus planting has long been controversial in Vietnam. Professor Vo Quy of the Vietnam National University is often described as the father of Vietnam’s environmental movement. “It is an urgent matter now to carry further research for gradually replacing the ‘current basket of eucalypt’ by another mix of tree species more suitable to the localities in which plantation operations are badly needed,” he said in 1991, at a seminar on the impacts of eucalyptus plantations in Hanoi.[14]

Seventeen years later, Vo Quy’s statement is more urgent than ever. But this is not just about eucalyptus. While Vietnam imports paper products, wood chips exports from a series of wood chip mills along the coast have increased rapidly in recent years. The pulp and paper industry is a major driver of the expansion of monoculture tree plantations in Vietnam. The winners are the pulp and paper companies, but the losers are local communities who lose their land and see their streams and wells dry up.





References


[1] Paper imports increase, enterprises still complain about shortage“, Vietnam Net, 15 May 2008.


[2] Book prices boosted as paper gets pricey“, Thanh Nien News, 17 June 2008.


[3] Paper shortage leads to import tax cut“, Vietnam News, 5 September 2008.


[4] Paper projects kick off to cool down shortage“, Vietnam News, 11 September 2008.


[5] Paper shortage leads to import tax cut“, Vietnam News, 5 September 2008.


[6] Pöyry awarded pulp mill engineering project in Vietnam“, Pöyry press release, 9 September 2008.


[7] Paper projects kick off to cool down shortage“, Vietnam News, 11 September 2008.


[8] Southern firm to build $36 mln pulp factory in Central Highlands“, Thanh Nien News, 28 June 2008.


[9] Over VND 900 billion to create ecotourism area in Lam Dong province“, Vietnam National Administration of Tourism, 21 April 2008.


[10] Kon Tum approves plantation forest project“, Vietnam News, 26 March 2008.


[11] ‘Create a successful social enterprise’“, InnovGreen website.


[12] Thanh Thung (2007) “$60m forest project takes root“, Vietnam Investment Review, 11 July 2007.


[13] I searched on http://www.fsc-info.org on 10 December 2008. No FSC certifications in Vietnam are registered to InnovGreen.


[14] Cited in Tran Xuan Thiep (1996) “Eucalyptus Plantations in Vietnam: Their History and Development Process“, in “Reports Submitted to the Regional Expert Consultation on Eucalyptus – Volume II”, FAO Regional Office for Asia and the Pacific, 4-8 October 1993, RAP Publication: 1996/44.

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