Vietnam plants will improve SCG unit's prospects
  • | Bangkok Post | January 30, 2010 09:42 AM

SCG Paper expects its sales to rise by 3.5 billion baht this year to 45.5 billion, mainly driven by the additional output from its kraft paper and packaging plants in Vietnam, says president Chaovalit Ekabut.

SCG Paper has just started operating its Vina Kraft Paper and NewAsia Industries Co plants in southern Vietnam, which it expects to help add 3.5 billion baht to its sales figures for 2010.

"The paper business is still on the rising trend since there is strong demand for paper products in Asia - particularly in emerging markets including China, India and Asean. This offsets the significant slowdown in Europe, the United States and Japan," said Mr Chaovalit.

SCG Paper, one of the core businesses of the industrial conglomerate Siam Cement Group (SCG), has just started operating its new plants, Vina Kraft Paper and New Asia Industries Co, in southern Vietnam.

Mr Chaovalit said the investment in Vietnam was part of the group's continuing strategy to become a regional leader in the industrial sector.

The Vina Kraft plant alone was worth 6 billion baht, with an initial utilisation of 85% or 180,000 tonnes per year out of a total 220,000 tonnes. Its sales this year are forecast at 2.5 billion baht.

"We built this factory with combined technology from Germany, Japan, the Netherlands and Belgium in order to enhance power consumption efficiency and pollution treatment," he said.

SCG holds 70% of the investment, with the rest held by Japan's leading packaging producer, Rengo. The plants finished construction in November last year.

Kraft paper demand in Vietnam this year is expected to exceed 1 million tonnes, up from 920,000 tonnes last year, which would give Vina Kraft a market share of 20% given its current output. The company expects to run at full capacity by 2011.

The company expects demand for kraft paper in Vietnam will grow strongly for many years as Vietnam is still in an initial stage of industrial development.

New Asia Industries, the kraft packaging part plant in Ho Chi Minh City, was taken over by SCG Paper in December with an investment of 770 million baht.

"We expect sales of kraft packaging will be at 1 billion baht this year. The packaging plant will require kraft paper from our Vina pant of 45,000 tonnes per year," said Mr Chaovalit.

The kraft paper plant now uses only 40% of the 238 rai of land that SCG bought in the My Phuoc 3 Industrial Estate.

"That means there will be 60% of land ready for our future expansion of kraft paper, so if we see the opportunity, we can make a decision right away," he said.

For packaging expansion, the company will acquire active assets in other potential areas in Vietnam soon, once all of the output of New Asia Industries is taken up.

Kraft paper consumption per head in Vietnam is currently about 10 kilogrammes per year compared with 30 kg in Thailand. Last year, Vietnam's kraft paper demand grew by 10%.

Shares of Siam Cement (SCC) closed yesterday on the Stock Exchange of Thailand at 218 baht, up one baht, in trade worth 224.6 million baht.