Sustainable Development Orientation for the Paper Packaging Industry

Expanding Production to Meet Growing Paper Packaging Demand

In Vietnam, paper packaging is currently the primary paper product, accounting for nearly 80% of total industry consumption. However, in 2019, Vietnam still had to import approximately 1.225 million tons, as domestic production only met about 5% of demand. While this is a limitation, it also opens opportunities for paper companies capable of investing in technology to create high-quality products that satisfy both domestic and foreign markets.

According to the Vietnam Pulp and Paper Association (VPPA), in March 2020, all paper industry product categories, including map paper, printing paper, and packaging paper, saw growth of 2-5% compared to February 2020.

Currently, domestic production of packaging paper mainly consists of surface paper (Testliner, Kraftliner) and corrugated medium paper, which is used in the production of corrugated cartons, meeting 84% of domestic demand. However, premium coated paper types like Whitetopliner, commonly used in seafood packaging and fruit export packaging, are primarily imported due to limited domestic production.

A current reality of the paper industry is the presence of numerous companies that are small, undercapitalized, and technologically outdated. Foreign direct investment (FDI) enterprises hold an advantage, with substantial capital, investment in advanced technology, high productivity, and an average output exceeding 400,000 tons per year, exemplified by Lee & Man Vietnam (420,000 tons per year). Lee & Man is also one of the few companies capable of producing Whitetopliner, with an average output of over 100,000 tons per year, accounting for nearly 25% of the total paper packaging production at the plant.

Additionally, to meet the rising demand for paper packaging, approximately seven domestic packaging paper plants are expected to start production or increase capacity during the 2020-2021 period.

Filling the “Gap” in the Premium Coated Paper Packaging Segment

According to the VPPA, in the next 5-10 years, the demand for paper packaging is projected to grow by 14-18% annually. Thus, expanding production capacity for packaging paper plants is a promising direction. However, the premium coated paper packaging segment remains a “gap” that the paper industry needs to address, rather than solely focusing on standard packaging paper production.

In general, well-capitalized paper packaging companies with the right investment strategies will not only meet market demand but also enhance the competitiveness of Vietnamese paper products.