VIETNAM'S PAPER INDUSTRY BEFORE THE FTA TRADE AGREEMENT

Until now, the reality of the paper industry has been that many small businesses, products are not of good quality, dependent on imported goods. Therefore, in the face of Free Trade Agreements (FTAs), if they want to survive and develop, paper enterprises must make efforts to change.

    According to preliminary statistics from the Vietnam People's Congress, in May 2015, Vietnam exported 49.2 million paper and paper products, a slight decrease compared to April 2015, down 2.5%, generally from the beginning of the year to the end of May. exports of paper and products earned  200.4 million USD, down 2.49% over the same period last year.

    Vietnam exports paper to 17 countries around the world, but in the first 5 months of 2015, paper exports to key markets decreased in turnover, of which the United States is the main export market, accounting for 23.5% of the market share. equivalent to 47.1 million USD, but the rate of exports to this market decreased the most among key markets, down 13.02%. Next is the Taiwan market down 0.52% and Japan down 2.11%, equivalent to $30 million and $29.6 million.

    In general, in the first 5 months of 2015, exports of paper and products decreased in most markets, the number of markets with a positive growth rate accounted for only 47%, of which exports to the Hong Kong market increased the most, up 194.57% although the turnover only reached 4.7 million USD. on the contrary, exports to the Chinese market decreased the most, down to 73.04% over the same period in 2014.

Export market of paper and paper products from 05/2015

    Such exports, but on the contrary, Vietnam also had to import up to 174.5 million USD in May 2015, an increase of more than 3.5 times the value of exports.  According to a report from the Vietnam Paper and Pulp Association, in  2014, Vietnam imported more than 1.5 million tons of paper and paper products, while exporting only 133 thousand tons. It can be seen that the export and import turnover of this industry has a clear difference and Vietnam's paper industry is still highly dependent on imported raw materials.

    The reason for the above problem is that Vietnam's paper enterprises are often small, machinery and equipment are lacking and weak, most of them are old machines, so the paper quality cannot be as good as in other countries. including some countries in the ASEAN bloc.

    Among the FTAs, the most notable for the paper industry is the signing of the establishment of the ASEAN Economic Community (AEC) at the end of this year and by 2018, the import tax rate of paper products and paper products from countries in the bloc will be 0%. This is very ominous and will cause fierce competition for the domestic paper industry because up to 50% of Vietnam's paper is imported from ASEAN.

    The tax reduction roadmap is both an opportunity for businesses to import cheap raw materials but poses a great challenge for manufacturing enterprises in the domestic market. The reason is that the quality of paper products from countries such as Indonesia and Thailand is better than Vietnam but the price is the same. Although paper products of Vietnamese enterprises are more convenient when saving transportation costs, they are often produced in small batches, while goods from other countries are mass-produced, in large quantities, so the cost will compensate for the transportation fee to give the price very competitive with domestic enterprises.

    However, it is worth mentioning that Vietnamese paper enterprises still do not have a clear grasp of the opportunities, challenges or regulations coming from the FTA. Many businesses, when asked, were quite surprised about the adjustments to tax rates related to the paper industry in the FTA and often cited the reason that they were small businesses, only consuming domestically, so they were not very interested.

    Facing the above situation, Vietnamese paper enterprises are required to have a plan to improve and enhance product quality and competitiveness, otherwise, when goods from ASEAN countries flood in, our country's paper products will definitely be in a weak position. In the near future, the direction of businesses is to improve production systems and machines to improve the quantity and quality of paper products. However, to do these jobs, businesses need capital support and improvements from the State in the provision of infrastructure and equipment.