THAILAND

Thai Paper Co. Ltd

General economic situation of the country - 2000

In 2000, the overall economy in Thailand continuously improved compared with 1999 as a result of more consumer spending and public investment. In the forth quarter of 2000, the market sentiment as well as consumer confidence was influenced by political uncertainty, declining deposit interest rates and a soft-landing economy of the United States. This, coupled with the already high oil prices and the low agricultural products prices, resulted in the sluggish domestic demand at the year-end.

The GDP growth rate is expected to be in the range of 4.0-4.5 percent (preliminary figures from Bank of Thailand).

For 2001, GDP is expected to grow at the same level of 2000. The economy growth would mainly contribute from the domestic demand while the export would be limited by the slow global economy.

Source: Bank of Thailand, the Thai Pulp and Paper Industries Association
¹ Preliminary figures of January-December 2000
² GDP at constant 1988 price

Development of Thai pulp and paper industry

In 2000, the pulp and paper industry in Thailand significantly improved as a result of the economic growth as well as the global rapid uptrend price adjustment in the industry, evidenced since mid-1999. The pulp and paper consumption was expected to grow at 5 percent to the level of 2.83 million tons, close to the pre-crisis level while the capacity was slightly expanded by approximately 6 percent from 4.36 million tons to 4.60 million tons. Due to the oversupply situation, there were no new expansion projects except for a minor addition of capacity from some modification or debottlenecking programs. The utilization rate for the industry was 67 percent in which some producers with export capability could run at much higher rate.

World pulp price continuously increased since mid-1999 to the third quarter of 2000 from US$540 per ton to US$710 per ton and softened at the year-end due to the slow demand in this region.

In 2001, the pulp and paper price is expected to be at the level of 2000 year-end for the first half and will tentatively go up as major world pulp producers have currently made plans for the curtailment of their production in order to balance the supply and demand.

Pulp industry in Thailand - 2000

Domestic capacity

In 2000, total production capacity for short fibre pulp was 956 000 tons, a slight increase from 1999. The existing five pulp mills include:

- Advance Agro Public Company Ltd;
- Panjapol Pulp Industry Public Company Ltd;
- Phoenix Pulp and Paper Public Company Ltd;
- Siam Cellulose Company Ltd;
- The Siam Pulp and Paper Public Company Ltd.

Pulp and wastepaper consumption, import and export

In 2000, fibre consumption in Thailand was 2.73 million tons, 1 percent increase from 1999, consisting of 655 000 tons of short fibre, 213 000 tons of long fibre and 1.86 million tons of wastepaper.

Demand for short fibre pulp decreased by 4 percent, compared with 1999, and was still less than the supply, forcing major pulp producers to export a surplus of 254 000 tons, 11 percent increase from 1999, to Asia-Pacific Region such as China, Australia, Singapore, Japan and the Republic of Korea. These producers enjoyed the good performance as a result of improved pulp price as well as the weakened baht in the second half of 2000.

Long fibre pulp consumption increased by 2 percent from 1999 and was 100 percent imported from Canada, United States of America, Chile, Sweden, Germany and New Zealand.

In 2000, wastepaper for 952 000 tons was imported mainly from United States of America, Japan, Germany, Singapore and the Netherlands. Old corrugated containers (OCC) accounted for 72 percent of the total import.

Paper industry in Thailand - 2000

The paper industry will face the unbalanced demand and supply situation for the following years and, therefore, would not expect a new capacity in this short term.

Domestic capacity

Paper capacity in 2000 was 3.65 million tons, 7 percent increase over the previous year, resulting from upgrading/modifying activities geared to strengthening competitiveness.

The total paper capacity in 2000 can be categorized into 2.21 million tons for kraft paper, 983 070 tons for printing and writing paper, 254 100 tons for paperboard, 80 340 tons for household and sanitary paper and 122 000 tons for newsprint paper.

Paper consumption, import and export

Total consumption of paper in Thailand was approximately 1.96 million tons in 2000, up 9 percent over the previous year. The increase mostly came from the boost in kraft paper and printing and writing paper demand, driven by the export sector and the boom in publishing and advertising.

In 2000, import of paper went up to 420 179 tons, sharply increased by approximately 22 percent from the previous year. This import mainly contributed to the shortfall in newsprint and high quality printing and writing paper especially carbon and self copy paper to meet the requirement for higher circulation or additional pages of newspaper. The major exporters to Thailand were Indonesia, Japan, United States of America, Sweden, China Taiwan, Finland, Republic of Korea, Russian Federation, New Zealand and Singapore.

Export decreased substantially by 20 percent from the previous year due to the recovery in domestic demand, mainly from kraft paper and printing and writing paper. The main export markets were China, China Hong Kong, Malaysia, Singapore, United States of America, Philippines, China Taiwan and Australia.

Outlook for pulp industry during 2001-2004

The consumption of pulp in Thailand is expected to increase from 868 000 tons in 2000 to 1 15 million tons in 2004. This includes the planned additional capacity of Phoenix Pulp and Paper Public Company Limited in 2003 with capacity of another 250 000 tons.

Demand and capacity of pulp industry in Thailand

¹ For domestic paper consumption only

Outlook for paper industry during 2001-2004

Paper consumption is expected to reach 2.44 million tons by 2004, 6 percent growth per year from 2000. At present, no new expansion project has been committed except for some modifications to increase the capacity with minimal investments.

An oversupply situation towards 2004 is still foreseen especially in kraft paper and printing and writing paper. On the other hand, there is a shortage in newsprint paper capacity and no new capacity is planned.

2001-2004 Projected consumption and capacity of paper in Thailand

Environmental management of Thai pulp and paper industry

Pulp and paper industry is fully aware of the responsibility to produce high quality products. In the meantime, it is accountable for managing, controlling and caring for the environment, health and safety. By trying to adopt world-class standards and operating techniques in our businesses, and by doing so, we would not only sustain our development but also be friendly to the environment.

As a result of the devotion to implement controls on quality, environment, health and safety, many companies in the industry have been certified for the world industrial standard, as follows:

Quality Management (ISO 9000)

1. Siam Kraft Industry Co., Ltd
2. Thai Kraft Paper Industry Co., Ltd
3. Thai Union Paper Industry Co., Ltd
4. The Siam Pulp and Paper Public Company Ltd
5. Siam Cellulose Co., Ltd
6. Thai Paper Co., Ltd
7. Thai Union Paper Public Company Ltd
8. Phoenix Pulp and Paper Public Company Ltd

Environmental Management (ISO 14000)

1. Siam Kraft Industry Co., Ltd
2. Thai Kraft Paper Industry Co., Ltd
3. Thai Union Paper Industry Co., Ltd
4. The Siam Pulp and Paper Public Company Ltd
5. Siam Cellulose Co., Ltd
6. Thai Paper Co., Ltd
7. Thai Union Paper Public Company Ltd
8. Advance Agro Public Company Ltd

Occupational Health and Safety Management System (TIS 18000)

1. Siam Kraft Industry Co., Ltd
2. Thai Kraft Paper Industry Co., Ltd
3. Siam Cellulose Co., Ltd
4. Thai Union Paper Public Company Ltd

Other than conforming to these standards, the industry is also practising pro-active environmental management, focusing on cleaner production, pollution prevention and waste minimization and source reduction. Besides, an environmental committee was set up to exchange know how and facilitate the environmental management process and to heighten the management standard of the whole industry.

In the present time, the industry, in collaboration with the government, are structuring the environmental indicator and report. The report will be used to inform the public about development of an environmental management and industry's dedication to maintain and ameliorate the environment.

AFTA: Tariff-cutting schedule

As a member of AFTA (ASEAN Free Trade Area), its tariff-cutting schedule is rigorously for all member countries. For the pulp and paper industry, which is effected from that, the import tariff would be brought down between 0 and 5 percent by the beginning of 2003 depending on the type of product.

The import tariffs by each condition between 1999-2003, separately by grade, are as below:

Source: the Customs Department (Thailand)
¹ Harmonized Code for Import and Export