A higher export duty on wood chips is needed to feed local pulp production with stable material sources.
An Hoa Paper Joint Stock Company has proposed state agencies hike the export duty on wood chips from 5 to 20 per cent to ensure stable materials for pulp production.
In fact, export wood chips rose sharply in volume in the past few years. In 2011, Vietnam shipped abroad around 5.4 million tonnes of wood chips, or tantamount to six million tonnes of wood, against four million tonnes of wood chips in 2012.
The revenue from exporting those big volumes of wood chips is approximately $300 million per year. However, the country needs to spend more than double that chunk $700 million on importing similar pulp volumes to feed the paper industry, according to Vietnam Paper Association (VPA).
VPA’s general secretary Vu Ngoc Bao said An Hoa Paper’s proposal to hike wood chips’ export duty was reasonable.
An Hoa Paper’s pulp production plant came on stream from August 2011 with an annual capacity of 130,000 tonnes in the first phase. By the end of March 2012 the plant turned out 15,000 tonnes of ISO standard pulp. As scheduled, the plant will reach its full capacity after one year going into operation.
But, to reach its 130,000 tonnes per year designed capacity the plant would need around 650,000 tonnes of wood per year.
However, An Hoa Paper faced difficulties in sourcing material for production and must share materials with other pulp production plants under Bai Bang Paper Company and Hai Ha Paper Factory, said An Hoa Paper’s director Tran Chien Cong.
In fact, timber is also used in the production of floor planks, art articles and processed into wood chips for export.
“An Hoa Paper does not have its own material growing areas like Bai Bang Paper so that it loses the initiative in sourcing materials for production. Besides, sharply rising wood chip exports, coupled with escalating material prices hamper the company efforts to source sufficient material for production,” said an expert from Ministry of Industry and Trade’s (MoIT) Department of Light Industries.
Export wood chips currently fetch VND2.6-2.8 million ($125-$135) per tonne, while timber is sold for around VND2 ($96) million per tonne in Tuyen Quang province. An Hoa Paper’s current production cost is reportedly surpassing its actual product prices.
The MoIT expert supported An Hoa Paper’s export duty hike proposal, but forest growers’ interests must also be taken into account as supply had outran the demand for pulp and industrial wood production.