Pulp And Paper Industry In Pakistan-final(1) 265362

2012 Embassy of BrazilIslamabad SECOM

PULP AND PAPER INDUSTRY IN PAKISTAN General information on the Pulp and Paper Industry in Pakistan. Research and Compilation by the Commercial Section of the Embassy of Brazil in Pakistan.

Pulp and Paper Industry in Pakistan

Table of Contents 1. Pakistan’s Economy ................................................................................................................ 2 2. Industry overview ..................................................................................................................... 2 2.1 Current Status of Pulp and Paper Industry in Pakistan ......................................... 3 2.2 Types of papers produced........................................................................................ 4 2.3 Method of Producing Paper .................................................................................... 4 2.4 Raw Material Availability .................................................................................................. 5 3. Current status of Trade and Potential of Pak- Brazil Trade Cooperation in this sector ...7 3.1 Potential of Export to Pakistan ................................................................................. 8

4. Future Outlook ....................................................................................................................... 10

5. Companies and Useful Links ................................................................................................ 11

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SECOM-Islamabad, Pakistan

Pulp and Paper Industry in Pakistan

1. Pakistan’s Economy Pakistan economy is positioned at 27th largest economy with 488 (1) billion USD in term of Purchasing Power Parity. Pakistan has a semi-industrialized economy, which mainly encomes textiles, chemicals, food processing, agriculture and other industries. Growth poles of Pakistan's economy are situated along the Indus River, diversified economies of Karachi and Punjab's urban centers. The economy has suffered in the past from decades of internal political disputes, terrorism, political instability, and tensions with neighboring India. Now, energy crises in the country are affecting the growth rate of the economy. Foreign exchange reserves are bolstered by steady worker remittances; however a growing current deficit – driven by a widening trade gap as import growth outstrips export expansion – could draw down reserves and dampen GDP growth in the medium term. Despite of the challenges faced, there are number of factors favoring bright future ahead. Large agriculture base, developing industrialization, abundance of natural resources, proximity of emerging economic powers, like China, Russia and India, and young population are some of the factors which indicate that Pakistan has a huge economic potential. At the centre of the Asian growth, Pakistan could potentially become one of Asia’s premier trade, energy and transport’s corridor. Geographical location suits transit trade with proximity to the Middle-East, West Asia, Central Asia, China and South Asia. Recent developments to realize this vision include Gwadar port to be linked by road & rail to Afghanistan, Iran and China and onwards to Central Asia, Middle East. Basic Data: Currency 1 Real equals Population Capital Territory Imports Exports Independence Language

1 Pakistani Rupee 46.2 Pak. Rupees (25-07-2012) 180 million (6th Largest) Islamabad 796,095 km2 (35th largest) 43 billion USD (2011) 25 billion USD (2011) 14th of August 1947 Urdu (national), English

2. Industry overview In 1947 when Pakistan came into existence, there was not a single plant to manufacture paper in the country. All the requirements of the paper in the country had to be met through imports. Pakistan Industrial Development Corporation (PIDC) was set up for the establishment of different industries including paper mill in public sector. In 1953, PIDC established the first paper mill at Chandargona in East Pakistan (Now Bangladesh), followed by a high grade paper mills -Adamjee Paper & Board Mills at Noshera in NWFP and a Newsprint Mill at Khulna in East Pakistan (Bangladesh) in 1959. Later on Adamjee Paper and Board closed down its operation. 2

SECOM-Islamabad, Pakistan

Pulp and Paper Industry in Pakistan

With the separation of East Pakistan in 1971, a serious shortage of writing/printing paper and newsprint was created in West Pakistan, as the supplies of these papers were completely cut off from Bangladesh. Now, this industry has different units across the country producing various grades of papers, using local and imported raw materials. Unfortunately, due to poor planning in 1980’s and 1990’s, many of the units are lying closed from that time. At present, in Pakistan there are about 100 units in the organized and unorganized sectors. These units produce Writing and Printing Paper, Wrapping and Packing Paper, White duplex coated, Un-coated board, chip Board and other board.

Paper Manufacturing in Pakistan

The position with regard to newsprint is, however, altogether different, as no newsprint plant has so far been established in Pakistan, with the result that Pakistan imports it’s all requirement of newsprint from abroad. In Pakistan forest area constitutes just around 4.8 [1] per cent or 4.2 million hectares which is far below the internationally acceptable ratio of 20-30 per cent necessary for the balanced economy.

2.1. Current Status of the Industry Paper Industry of Pakistan is not among the prime industries of the country and is in developing stage. Consumption of Paper in Pakistan is in far excess of the domestic capacity. So, the local demand of some types of papers is met through imports.

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Pulp and Paper Industry in Pakistan

Table-01-Snap Shot of the Industry Installed Capacity Units

100

Installed Capacity Utilization of the Capacity

900,000 Tons 434,740 Tons (2011)

Number of Employees

100,000

Tariff on import of Paper products

10-20 %

Tariff on import of Chemical wood Pulp

Nil

Over a period of time domestic industry has attained capacities and capabilities to produce all major Paper & Paperboard products leaving small room for imports. However, domestic demand of some specialized papers, including coated art paper / card and newsprint, among others, is met through imports. More than 70 % of mills are located in Punjab province, 20 % are in Sindh province and 10% are in Khyber Pakhunkhwa province.

2.2. Types of paper Produced in Pakistan      

Writing and printing paper Packaging board Liner board (A type of paperboard used in making corrugated cartons) Corrugate medium Continuous computer reels Tissue and Security/banknote paper

2.3. Methods of Producing Paper in Pakistan Neutral sulfite semi-chemical pulping process (NSSC) is one of the most common pulping methods in Pakistan and wheat straw is used as a raw material. The pulping liquor used in NSSC process is a solution of sodium sulfite containing sodium bicarbonate or sodium hydroxide as a buffer to keep the PH around 7. The NSSC process consist of four steps (a) steaming of raw material for 30 min at atmospheric pressure, (b) addition of pulping chemical and application of 100 psi pressure at a temperature of 120-125 centigrade for 60 min, (c) third step is the removal of excess liquor not absorbed by the raw material, (d) lastly digestion at 140-160 centigrade for 16 h. The yield of this process is 65-90% depending upon raw material, buffering agent and cooking time. Pakistan is also one of the few countries in the world where agricultural waste and Neutral Sodium Sulfite cooking process is also used to produce paper and paperboard grades. The fiber is given a combination of treatments with alkali and chlorine. Such methods were used for bleaching as early as 1787, and it is claimed that straw pulp was so made in 1830. 4

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Pulp and Paper Industry in Pakistan

2.4. Raw Materials Availability The basic raw material sources for manufacturing of paper and paper board can be broadly classified into three groups: Wood based material Among the wood based raw materials, coniferous pine is in short supply in Pakistan. The soft wood forests in the country exist in extreme northern hills of North West Frontier province and Azad Kashmir which are mostly inaccessible due to lack of suitable communication facilities. As we know that Forest plantations are the major assets of the pulp and paper industry. Unfortunately, forests in Pakistan cover constitute only 4.8 % [1] of total Land against the international benchmark of 25 %.

Eucalyptus trees (Safeda in Local language) in Pakistan- Source of Raw material Paper Pulp

Eucalyptus in Pakistan is among the non-coniferous species, are produced mostly on irrigated land. The eucalyptus trees plantations are not yet sufficient to meet pulping requirements of the paper industry. Also it’s a fact that the specie of eucalyptus grown in Pakistan consumes lot of underground water. So its growth is restricted due to this fact.

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Pulp and Paper Industry in Pakistan

Agricultural wastes Among the agro-based wastes the following are being extensive used: Straws Straws are by-products of cereal crops, the major being wheat and rice. Paper and paper board industry is presently the main of the marketed supplies of wheat straw. Adequate quantities of wheat straw are available for the industry. Rice straw is generally used as packing material for glass and ceramic products. Its use in paper making is limited as it contains silica and gives some process problems.

Wheat Straw used in enrichment in Pakistan.

Bagasse It is a well-established raw material for making almost all grades of paper, from fine quality paper to board. Grasses There is a wide range of grasses grown in Pakistan which can be used for making pulp and paper. Kahi grass grows wild along the river banks, some quantity are already being use by paper mills. Other grasses available in Pakistan are Bhabbar, Gauj Gumaz,

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Pulp and Paper Industry in Pakistan

Rhodes Grass, Chorkha, Pawpi, Chari and Dhawar. The main problems for using grasses relate to their collection and procurement. Other Raw Material Waste Paper There are two main sources of collection of waste paper. One is waste paper collected at offices and factories such as government offices, business concerns, banks, newspapers and publishing companies, printing and book binding concerns etc. the other source is waste paper purchased by trash dealers from private persons at their homes. It is estimated that adequate quantities of waste paper are available for use in paper board industry. It is also being imported for the paper industry. Cotton Linters and Waste These are available from ginning and spinning operations as their by-products and are used for making pulp of high quality for producing superior paper as well as blending with short fiber pulp produced from wheat straw and grasses. Adequate quantities of cotton linters and wastes are available for paper industry while about 10 % of the cotton waste is also exported from Pakistan. Pulp and Waste Paper Wood pulp is imported while waste paper is available locally as well as imported. Wood pulp is imported mainly from USA, Sweden, Canada and Far East while waste paper is being imported from USA, UAE, Saudi Arabia and Singapore. Pakistan has no imports of Pulp from Brazil. For Details related to bilateral trade, refer section 4 of the Report.

3. Current status of Trade and Potential of Pak- Brazil Trade Cooperation in this sector Brazil is 3rd largest exporter of Pulp. Following tables will show the whole picture of the trade volumes of two countries with the world and among each other. Table- 02: Trade statistics of Pulp of wood, fibrous cellulosic material [NCM 47] Particulars

Amount in year 2011

Brazil’s export to the World

5 billion USD

Pakistan’s import from the World

97 million USD

Pakistan’ import from Brazil

Nil

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Pulp and Paper Industry in Pakistan

Table- 03: Major Suppliers of Pulp to Pakistan Particulars

Amount in year 2011

1. Canada

16 million USD

2.USA

13.6 million USD

3.Sweden

13.5 million USD

4.Chile

7.9 million USD

5. UAE

6 million USD

Table-04: Major Destination of Brazilian Pulp [NCM 47] Particulars

Amount in 2011

1. China

1.2 billion USD

2.Netherlands

1.059 billion USD

3.USA

934 million USD

4. Italy

497 million USD

5.

197 million USD

3.1. Potential of Export to Pakistan Pakistan imports Pulp products from the world and total import of Pakistan was about 97 million USD in 2011. Pakistan does not import any Pulp products from Brazil. Chile is the only Latin American country which exports those products to Pakistan. The major product in the Pulp category is “Chemical wood pulp, soda or Sulphate [NCM 4703]”. Brazil exports about 4.6 billion USD of these products to the world. It’s also worth mentioning that there is no duty on import of “Chemical wood pulp, Soda or Sulphate [NCM 4703]” in Pakistan. Brazilian companies should look for this niche market to export their products. Apparently there is good potential of import subject to cost viability of the products.

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SECOM-Islamabad, Pakistan

Pulp and Paper Industry in Pakistan

Table- 05: Trade statistics of Paper and paper Board [NCM 48] Particulars

Amount in year 2011

Brazil’s export to the World

2.2 billion USD

Pakistan’s import from the World

527 million USD

Pakistan’ import from Brazil

7 million USD

Pakistan imports large quantities of newsprint paper. Newsprint is the major imported finished product followed by white duplex/coated board. Pakistan imported 53 million USD of News print paper from the world in 2011. Table- 06: Major Suppliers of Paper and paper Board [NCM 48] to Pakistan Particulars

Amount in year 2011

1. China

92 million USD

2.Sweden

71 million USD

3.Indonesia

70 million USD

4.Egypt

33 million USD

5. USA 21 million USD th Note: Brazil’s position is 19 as top suppliers of Papers to Pakistan. Table-07: Major destination of Brazilian Paper and Paper Board [NCM 48] Particulars

Amount in year 2011

1. Argentina

456 million USD

2. USA

211 million USD

3. UK

141 million USD

4. Venezuela

111 million USD

5. Chile 103 million USD Note: Pakistan is in 34th biggest destination of Brazilian Paper and Paper Board products.

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Pulp and Paper Industry in Pakistan

Table -08 Few Paper Products which have Potential for Export to Pakistan

H.S Code

Particulars

Uncoated paper 480255 and paperboard. Multi-ply paper and 481092 paperboard. 480411 Paper, Kraft liner, in rolls, unbleached, uncoated. 480439 Paper, Kraft, rolls or sheets.

Pakistan’s import from Brazil

Amount in USD thousand Pakistan’s Brazil’s import from Export to the the world World

Potential Market for in Pakistan

20

33,039

228,549

33,019

368

70,448

171,437

70,080

323

10,999

159,483

10,676

NIL

3,573

13,926

3,573

4. Future Outlook Paper Industry is broadly classified in three major categories i.e. Packaging Board, Container Board and Writing and Printing Papers. Although the conditions of Paper Manufacturing are not encouraging at the moments in Pakistan and Future outlook is also look bit gloomy on of energy crises, unavailability of cheap raw materials, and wood pulp. However other segments within this industry are showing good progress. As a whole Future Outlook of the Paper industry in Pakistan seems bright as lots of opportunities are available in the wake of rising demand for Paper and allied products. The demand for the various categories of paper and paper board has shown a steady increase over the years and is expected to continue increasing as population increases, literacy improves and economic growth takes place. The shortage so far has been met through imports. Recently, a Finland company invested in this sector. A Pakistani Company-Packages Limited specializes in liquid packaging and wood free writing Printing Papers recently entered into a t Venture [2] agreement with Enso Stora from Finland. In this deal Finnish company providing global solutions based on renewable materials– is to set up a paperboard t venture in Pakistan with Packages called Bulleh Shah Packaging as it shifts focus from its papermaking business to healthier areas such as the packaging business. Paper industry has special significance in the economic structure of Pakistan. This is because of two main reasons. First, Pakistan is predominantly an agrarian economy offering suitable raw material base. Second, Pakistan has a large and growing market size having a population of over 180 million. These factors are translating into consistent demand for paper industry output. Literacy is one of the important factors of development of any country. Despite of current challenges faced by the country it’s a 10

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Pulp and Paper Industry in Pakistan

renowned fact that Pakistan still has huge potential to develop. Literacy goes directly with the development. Literacy means education and education impliedly means more books, more note books and more writing pad etc. Education and literacy tends to increase the demand of the paper and its products. Imports will be encouraged to meet the demands for pulp and paper, which cannot be met by the forest resources in the country due to the large gap in supply and demand. So, on the basis of above we can say that future of this market for Brazilian exports is very promising.

5. Companies and Useful Links 5.1. Major Pakistan Companies dealing in Paper Industry Packages Limited Shahrah-e-Roomi P.O. Amer-Sidhu Lahore-54760, Pakistan Tel: + 92 42 35811541-6, 35811191-4 E-mail: [email protected] 5.2 References___________________________________________________________________ 1. Convention on Biological Diversity www.cbd.int/countries/profile/?country=pk 2. http://dawn.com/2012/09/18/stora-enso-to-set-up-paperboard-jv-in-pakistan/ 11

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Pulp and Paper Industry in Pakistan

5.3 Usefullinks____________________________________________________________________ All Pakistan Paper Merchants Association of Pakistan http://www.appma.com.pk/ Board of Investment (BOI)

http://www.pakboi.gov.pk/

Ministry of Commerce, Pakistan

http://www.commerce.gov.pk/

Board of Investment (BOI) Ministry of Commerce, Pakistan

www.pakboi.gov.pk/ www.commerce.gov.pk/

SECOM- Embassy of Brazil in Islamabad www.embassyofbrazil.com.pk/commercial_section.html

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