Vietnam 's paper industry would aim to meet 70 per cent of domestic consumption demand by 2020, according to its development plan.

However, the industry would face many challenges in reaching this target, in particular a lack of material, capital and technology.

Experts said that the industry should assert more control over the licensing of paper factories and should manage investments more efficiently during the plan's implementation over the next decade.

The Vietnam Paper and Pulp Association reported that the industry would require 95.6 trillion VND (4.57 billion USD) during the period from 2006-20, including 87.7 trillion VND (4.2 billion USD) for new factories and 7.9 trillion VND (370 million USD) for the development of paper-producing forest.

The investment would supply 600,000 tonnes of pulp in 2010 and 1.8 million tonnes of pulp in 2020.

However, during the 2006-11 period, many paper production projects were operated inefficiently and had negatively affected the environment, causing the development plan to stall, the association said.

Nguyen Kim Hue, head of the Information Technology Department at the Cellulose and Paper Industry Institute, said pulp factories lacked wood during the 2006-11 period because forest growers had not offered their product at a reasonable rate.

Banks have been sceptical about the competitive ability of the industry, and have been reluctant to provide it with loans. Only two of eight paper projects developed in 2010 have progressed according to schedule.

Phan Chi Dung, head of the Light Industry Department under the Ministry of Industry and Trade, said Vietnam has 500 paper producers but almost all of them are small- and medium-sized enterprises using old technology.

But the new development plan has not fixed specific standards to improve the quality and efficiency of production, he said, nor does it provide guidelines for waste treatment.

Dung said one possibility would be to withhold licenses from certain production facilities to ensure the sustainable development of the industry. The plan would be capped at a total capacity of 250,000-400,000 tonnes of pulp per year.

Pham Van Tu, representative of the Vietnam Paper Corporation, said pulp production factories should not be sited far upstream along rivers to avoid pollution of environment.

All previous development plants had failed and a management team was urgently needed to ensure the implementation of the plan, said Tu, adding that the provinces should grant licences for pulp and paper factories according to the regulations approved by the Government.

At present, average paper consumption world-wide was 4 kilos per person per year, while the average for Vietnamese was around 1 kilo. Ignoring environmental concerns, Vietnam has the potential to expand its paper market in the future but the industry would need support from the State, said the association.

The State should stabilise tax policy for the paper industry according to World Trade Organisation (WTO) guidelines, said the association. It should also introduce regulations on limiting the use of detergents in paper production.

Vu Ngoc Bao, general secretary of the association, said the State should call on foreign investment to upgrade the processing of pulp and paper production technology.

The State should create favourable conditions for the industry to accumulate capital and create incentives for enterprises and households to develop new seeds in order to improve output, quality and competitiveness of pulp, Bao said. /.