B600m for Vina Kraft subsidiary in Vietnam

General Manager Chalokeporn Phalajivin said the planned budget just won board approval, and the company expects the new investment will help increase production of kraft and corrugated paper by 30,000 tons to 250,000 tons per year starting from mid-2013.
Some 97% of new production will be for domestic use in Vietnam and the rest for shipment to Japan, Malaysia, Cambodia, Indonesia and Thailand.
Vina Kraft Paper, a 70:30 joint venture of SCG Paper and Japan’s Rengo Co Ltd, produces kraft and corrugated paper.
Demand for paper in Vietnam is estimated at 1 million tons a year, surging by 10% a year the past five years. Local production averages 900,000 tons a year.
Vina Kraft Paper’s US$171-million factory is on 380,000 square meters in Binh Duong province, immediately to the north of Ho Chi Minh City.
It started manufacturing in mid-2009, producing 220,000 tons of kraft and corrugated paper. The factory employs 225 Vietnamese workers and 29 Thais.
Mr. Chalokeporn said Vietnam is well-suited for labor-intensive industries due to its cheap labor costs and abundant raw materials.
However, he noted it is still quite hard to recruit highly skilled laborers in Vietnam, as industrial development kicked into high gear just over a decade ago.
Vietnam needs to improve infrastructure and power facilities to serve industrial development in the future, said Mr Chalokeporn.
Vina Kraft has a 20% share of the 16-billion-baht local paper market.
SCG began operations in Vietnam in 1992 and now has seven business units specializing in building materials, distribution, paper and chemicals, with four representative offices to help it connect with local partners and initiate local programs. SCG’s total investment in Vietnam is valued at 11 billion baht.
Mr. Chalokeporn said given the global economic uncertainties, Vina Kraft is undecided about setting up a second paper plant in Vietnam.