Paper industry badly hit by pandemic

The paper industry is suffering under a double impact of the Covid-19 pandemic

Difficulties in both inputs and outputs

Vice President of the Vietnam Pulp and Paper Association (VPPA) Dang Van Son said that due to the outbreak of the Covid-19 pandemic, enterprises are experiencing production material shortage. While other sectors are affected by production materials shortage from China and part of Europe, the paper industry is suffering under a double impact in terms both of input materials imported from China, Europe and the US, and exports to these markets.

Specifically, input materials to produce industrial packaging are mainly recycled paper, which accounts 85-90 percent, or some even up to 100 percent, while the domestic collection rate is only 40 percent, and the remainder depends on imports. Dang Van Son said apart from the challenges of input material prices, transportation costs have also increased sharply, affecting exports. All of these factors combined have forced many enterprises in the paper industry to halt production.

“Not to mention that enterprises will be forced to stop operations when their employees contract the COVID-19,” added Dang Van Son.

Due to higher prices of input materials, prices of finished paper products have increased by VND200,000-300,000 per tonne. Meanwhile, the output markets (both domestic and export markets) are shrinking due to difficulties in the supply of materials, higher transport costs and low market demand. In addition, paper enterprises are under pressure of short-term loan payment, worker absences and the risk of canceled orders.

Coordinated solutions

In face of these difficulties, VPPA recommended that paper businesses monitor the market calmly to take appropriate steps. “If we are too anxious to buy raw materials, prices could be pushed up too high, and this situation creates anxiety for the businesses themselves and their partners, affecting the market economy and society,” said a VPPA representative.

In addition, VPPA is trying to support businesses through trade promotion, including the supply of raw materials, payment methods as well as solutions to stabilize production. Specifically, VPPA has cooperated with XenLuLo Technology Joint Stock Company to introduce reputable suppliers who have sufficient supply capacity of paper materials from the US, Japan, the Republic of Korea and other materials, equipment and chemicals to serve the industry.

VPPA expects the government and relevant ministries and agencies to issue appropriate support policies to help paper businesses. They include reduction of import procedures, exemption and reduction of import taxes, refund of value added tax, preferential loans, lower interest rates and bank payment extensions. The association also proposed that the MoIT ask suppliers not to unilaterally increase material prices or cancel orders due to the disease.