Paper industry booms on global recession, sizzling consumption

---

Mushir Ahmed
Global recession has spurred a boom in the country's paper industry, as local manufacturers have snapped up machinery at a cheaper price to ramp up production at home, the industry said.
This week commodity conglomerate Meghna Group became the latest company to enter the sector, while Magura Group invited bids to more than double its production.
Chittagong-based TK Group, the second largest paper manufacturer, is investing Tk1.50 billion to build the country's largest newsprint mill, enough to meet the entire local demand.
Other groups like SA and Mostofa in Chittagong have also joined the fray, which some experts fear may create a cement-like bubble in the industry.
Officials said a combination of sizzling growth in consumption and the global recession that shed machinery price to its lowest is behind the paper boom.
"Consumption of paper has been growing at a robust 20 per cent annually in the last five years," Rezaul Karim, a director of Magura Group and a top industry expert, said.
"There have been spectacular rise in demand for writing and printing papers. Newsprint, industrial and board papers have also grown sizeably," he said.
Per capita paper consumption in Bangladesh is about six-seven kilogram, which is less than half the international average.
Magura Group is raising its production to 160 tonnes from 60 tonnes per day at an investment of Tk 700 million, making it the third largest producer in the country.
"We have invited tender to procure second hand machinery from top European companies. Every company I know is snapping up such machinery because of plummeting prices," he said.
Sugar-soybean-cement giant Meghna Group also bought similar machinery from top two Japanese companies to build coated board paper mills at Meghnaghat in Narayanganj
Tanvir Paper Mills has been built at an investment of Tk1.10 billion and it can produce 120 tonnes of board, craft and writing papers a day, group general manager Afzal Hossain said.
"We entered the paper business because of its impressive growth. Besides, we got some top class machinery at one-third of their standard international price," Hossain said.
Bangladesh usually meets most of its board paper demands --- used for cartons, bags and packaging --- through import. Tanvir's entry would take the country to near to self reliance.
TK, meanwhile, said it has bought one of the largest paper plant from Germany to set up a 500 tonnes-capacity newsprint on the south bank of the Karnaphuli.
Group director Mohammad Salimuddin said the MAF Paper would be the country's largest newsprint mill once it goes into operation by October this year.
"MAF will meet the entire newsprint demand of the country," he said, adding that it would be several times bigger than Bashundhara's Shahjahal newsprint mills.
Officials said Bashundhara, the industry leader with about 500 tonnes capacity in writing, offset, newsprint and tissue, is the only company which is not expanding at the moment.
But there have been "rat race" among some groups such as SA and Mostofa to build small sized factories.
Salim of TK warned that the "sudden rush" might create a bubble in the industry, which would affect everyone.
"Some companies are blindly coming into the sector. It's true the market is growing at a hefty rate, but already a significant amount of installed capacity remained unutilised," he said.
According to the industry, Bashundhara cannot utilise its maximum capacity while TK regularly cuts production by 20-30 per cent.
"There are now too many players after a small pie. It may lead to a bubble that we saw in the cement and sugar sectors."
A massive rush of companies in cement sector early 2000-2001 and in sugar two years later led to bankruptcy of several top plants and eventually affected the banking sectors.