Domestic paper manufacturers to increase paper prices

Entering the second quarter of this year, most of the paper producers have to face with much difficulty due to the increasing prices in raw materials such as electricity, water, chemicals, as well as transportation costs. In addition, the bank’s interest rates keep on surging. Looking at this, the enterprises have now agreed to raise the paper prices.

Up to the end of March, the price for scrolled printing papers stood at 16.8-17.4 million dong per tonne (VAT inclusive). In early April, the paper producers raised the price by additional 1-1.2 million dong per tonnes (those with large production capacity) and 0.6-0.8 million dong per tonne (those with medium and small production capacity).

Vu Ngoc Bao, general secretary of Vietnam Pulp & Paper Association (VPPA) explained the main reasons for the increase in raw material prices was due to the fluctuation in foreign exchange rates between US dollar and dong, resulting in the rise in imported raw materials. In addition to forex pressure, the paper firms also had to suffer from effects of increased electricity and water prices.

In addition, at present, the price of paper pulp rose to the highest level since then. In details, the long-fibre pulp price stayed at over $900 per tonne, short-fibre pulp of $850 per tonne and waste paper of $270 per tonne. The domestic waste paper price climbed up from three million dong per tonne to 3.7 million dong per tonne. As the results, many domestic paper producers decided to adjust the sales price for printing papers, writing papers and those for printing newspapers.

Although the domestic paper prices tend to accelerate at the moment, the paper supplies are limited because of various reasons. Bai Bang Paper Plant, under Vietnam Paper Corp temporarily halted production process for annual maintenance period. In addition, the plant was in process of raising production capacity to 125,000 tonnes per year. Meanwhile, the medium and small paper producers had to deal with difficulty in pulp sources. It is predicted that the total paper production volume in 2010 will continue dropping; the supplies cannot meet the demands, leading to the hike in sales prices in the near future.

In addition, according to Vietpaper, Fibria, the largest BEK pulp producer in the world with total capacity of 5.4 million tonnes per year, has lately announced to customers about the increase in BEK pulp price, starting from May 1. After receiving the announcement, the domestic paper producers worked out the plan for increasing paper sales price. Tan Mai Group Joint Stock Co revealed that the company planned to raise paper price by additional 9-14 percent in early May.

However, Vu Ngoc Bao added that there was a paradox in tax policies to be currently applied for raw materials to produce papers. At present, 72 percent of raw materials used in paper industry are waste paper. The rate of waste paper to be collected for paper recycling in Vietnam was 32 percent, compared to other countries in the region of 60-65 percent. According to current state laws, the imposed waste paper import tax is 0 percent, therefore the paper enterprises only have to pay value-added tax.

For domestic waste paper purchasers, if the sellers offer VAT bills, the producers will enjoy tax discount. However, in case the sellers cannot issue VAT bills, the waste paper collectors have to pay income tax of 3 percent for the sellers and pay VAT. In fact, if using domestic waste paper source, the paper producers have to pay VAT of over 800,000 dong per tonne. However, in case they use imported waste paper, the payable VAT value reduces to about 202,000 dong per tonne. Now, the paper industry suffers from trade deficit of $1.5 billion. Therefore, if the government adjusts the tax policies for domestic paper producers, the enterprises can not only save money in collecting low-price waste paper, but also reduce trade deficit.

Due to effects from various factors of increasing prices in paper pulp, oil, coal, electricity, water, chemicals, transportation costs and high forex rate, the domestic paper markets will become hotter and hotter. The domestic paper producers cannot help raising the paper sales price.

ThoibaokinhteVietnam

Tags: Vietnam paper industry, Vietnam paper manufacturers