SAHABAK JSC: Inspiring Forest Product Processing Industry

Right after its re-establishment in 1997, Bac Kan province embarked on deploying social and economic development. With local available resources, it defined to rely on forests to go ahead. Therefore, how to develop forestry its related industry is always a constant concern of provincial leaders. On his working visit to Bac Kan, Deputy Prime Minister Nguyen Xuan Phuc said: To encourage people to develop forest economy, the province needs to have mechanisms and policies to ensure a stable market for forest products. And, to unlock forest potentials in Bac Kan province, in 2009, SAHABAK Joint Stock Company was established with the expectation of promoting the development of forest product processing industry in Bac Kan.

In 2009, SAHABAK Joint Stock Company was set up from the cooperation agreement of Saigon Industry Corporation, Hanoi Construction Corporation, Bac Kan Forestry Company, and Saigon - Indochina Real Estate Joint Stock Company. The VND260-billion joint venture was expected to tap local forestry resources.

Mr Le Viet Thang, General Director of SAHABAK Joint Stock Company, said, to carry out the project effectively, the predetermined factor is material sources. Although Bac Kan has a large forest area, afforestation was very fragmented before 2005, making it very difficult for large-scaled concentrated production. From 2006, the afforestation movement was promoted and the quality of material forests was improved as a result. This new forestland is expected to be commercially exploited by 2014. Thus, SAHABAK will quicken the progress of its project.

 

In keeping with the provincial afforestation development roadmap, in the initial stage, SAHABAK invested VND34.5 billion to build and commission a timber plank processing factory with a yearly production of 3,000 cubic metres. The facility went into operation early in 2011 and formally supplied its products to the market from May 2011. Since its operation, the plant has consumed all local raw timber in the province, with 17,000 - 20,000 cubic metres a year. This year, the plant was expected to earn nearly VND10 billion in revenues and created jobs for 300 local workers.

Basing on material supply and market surveys, the Annual General Meeting of Shareholders of SAHABAK Joint Stock Company decided to build a medium-density fibreboard (MDF) factory. Approved in May 2011, the project with an annual capacity of 108,000 cubic metres of MDF required a total investment of VND1,140 billion. It will consume 200,000 cubic metres of raw woods a year. The MDF plant is expected to be completed and commissioned in the third quarter of 2013. Using constant pressure lines imported from Europe, the MDF factory is considered the most modern timber processing technology in the country.

 

When the facility starts operations, it will contribute some VND40 billion of taxes to the local State Budget a year, some VND500 billion to the local GDP. In particular, it will create direct employment for hundreds local labourers and thousands of forest workers and service providers. Input timbers for the MDF facility mainly come from planted forests, mainly acacia. As the plant needs about 200,000 cubic metres of material woods a year, it will need 3,000 hectares of forestland.

 

Mr Le Viet Thang said input materials have been carefully calculated by the company. The plant will uses logs from forests owned by Bac Kan Forestry Company and SAHABAK on the one hand; it spends VND175 billion to fund material zone development covering on 10,000 ha in Bac Kan town, Cho Moi, Bach Thong, Na Ri and Cho Don districts on the other. The company sends its specialists to these five localities to instruct forest planters while pledging to buy all their timbers. Forest planters are lent VND3 million, free of interest, for each hectare of forest a year.

 

Not only focusing on economic outcome, the company is ensuring rights and interests of forest growers. This approach is believed to lay the foundation for the sustainable development of SAHABAK.