SCG Paper president Chaovalit Ekabut made the remark yesterday at the grand opening of the Vina Kraft Paper plant in Binh Duong.
Vina Kraft is expected to contribute Bt2.5 billion in sales this year, while another Bt1 billion will come from New Asia, Vietnam's leading producer and distributor of corrugated containers. Located in Ho Chi Minh City, New Asia has a capacity of 50,000 tonnes per year.
SCG Paper and Japanese packaging firm Rengo acquired New Asia from Toprife Hong Kong last month.
Vina Kraft Paper is a Bt6-billion joint venture between SCG Paper and Rengo, with the Thai firm holding a 70-per-cent stake.
Chaovalit said despite the global economic slowdown, Vietnam's gross domestic product grew by 5 per cent last year.
SCG Paper estimates demand for kraft paper of Vietnam this year will increase to 1 million tonnes, from 920,000 tonnes last year.
Vietnam's demand for corrugated containers continues to grow in line with its rapid economic expansion. Demand is forecast to grow by 8-10 per cent annually over the next three years.
SCG's Vietnamese investment strengthens the group's paper business, with Vietnam now the main production base besides its facilities in Thailand, he said.
Chaovalit said Vietnam was witnessing annual growth in the packaging-paper market of 10 per cent, against just 4 per cent in Thailand, which had persuaded the company to focus on investing in the country.
The new kraft plant in Vietnam has made SCG Paper the leading producer in Asean, with an overall kraft production capacity of 1.4 million tonnes. The second-ranked Asean producer is an Indonesian firm with a production capacity of 1 million tonnes.
Vina Kraft has an annual production capacity of 220,000 tonnes but will initially run at 85-per-cent capacity.
Vina Kraft general director Chalokporn Phalajivin said 90 per cent of production would be sold in Vietnam, with the remainder exported to Cambodia.
"We will start exports to Cambodia this year, switching from supplying kraft paper from the Thai plant, because Vietnam is closer to Cambodia," he said.
Chalokporn said the company expects to run at full capacity next year as demand for kraft paper in Vietnam increases and exports start to grow.
He said capacity would be increased once demand exceeds supply, adding: "We are currently only using 40 per cent of the 238 rai of space at the factory."
Chaovalit said that besides the new plant in Vietnam, the company was ready for additional investment in the country, with mergers and acquisitions seen as the most appropriate medium.
He added that several Chinese paper manufacturers had ordered large quantities of scrap paper for their operations ahead of the Chinese New Year, boosting the price of pulp to US$240 to $250 (Bt7,950 to Bt8,280) per tonne.