GOIC: “Paper Industry investments in the Gulf valued at 9.3 billion USD”

Saudi Arabia was ranked first in terms of factories, followed by the UAE

The Gulf Organization for Industrial Consulting (GOIC) announced in a report that the cumulative investments in the paper products manufacture reached approximately 3.9 billion USD in 2015, compared to about 2.6 billion USD in 2010, an increase of approximately 49% and a CAGR of 8.3% during this period. Saudi Arabia was ranked first, with cumulative investments reaching more than 3 billion USD or 77.5% of the total investments in the GCC paper products industry in 2015. The UAE was ranked second with a share of 14.2%, followed by Kuwait (4.6%), Oman (2%) and then Qatar and Bahrain with smaller percentages.

The report of GOIC’s Gulf Industrial Knowledge Centre (GIKC) revealed that there has been an increase in the number of factories operating in the area of paper industries in the GCC. In fact, there was 459 factories in 2015 compared to 346 in 2010, an increase of approximately 32.7% reflecting the surging demand for these products as a result of the growing health awareness, population, use of paperboard bags and boxes in the packaging of industrial products, vegetables, fruits, dates, eggs etc. and in the field of air cargo and others. According to the report, investments in pulp and paperboard doubled between 2010 and 2015, and the manufacture of corrugated paper, containers made of paper or paperboard increased by about 58% during the same period of time, with the construction of new factories with high design capacities to respond to the growing local demand for these products.

In terms of geographic distribution of factories operating in the field of paper and paperboard products, KSA was ranked first with 206 factories forming approximately 44.9% of the total factories operating in this field in the GCC, followed by the UAE with 166 factories (36.2%), Bahrain with 26 factories (5.7%), Oman with 25 factories (5.4%), Kuwait with 21 factories (4.6%) and Qatar with 15 factories (3.3%).

GOIC’s report underlined the growing labour force in the field of paper and paperboard industries from 30247 workers in 2010 to 45472 workers in 2015, an increase of about 50% with a CAGR of 8.5%.

The manufacture of other articles of paper and paperboard like hygiene paper, cleansing tissues, cups, dishes, trays, computer printout paper ready for use, envelopes and lettercards, wallpaper and other products got the biggest labour force share that counted 26652 workers in 2015, or 58.6% of the total labour force in the field of paper products, followed by the manufacture of corrugated paper with a total of 16620 labourers (36.5%), and then pulp and paper and paperboard with 2200 workers (4.8%).

As to the geographic distribution of the labour force in this field, Saudi Arabia was ranked first with approximately 32517 labourers in 2015 (about 71.5% of the total labour force of this field in the Gulf), followed by the UAE with 8544 workers (18.8%), Kuwait with 2002 workers (4.4%), Bahrain with 1115 workers (2.5%), Oman with 771 workers (1.7%) and Qatar with 523 workers (1.2%).

In terms of factories, the average investment per factory was the biggest in Saudi Arabia in 2015 (approximately 14.7 million USD), followed by Kuwait with an average of 8.53 million USD, UAE (3.35 million USD), Oman (3.15 million USD), Qatar (2.57 million USD) and Bahrain (0.95 million USD). As for the average investment per factory in the GCC, it totalled 8.51 million USD.

The average number of workers per factory was the highest in Saudi Arabia too with 158 workers, followed by Kuwait (95 workers), UAE (51 workers), Bahrain (43 workers), Qatar (35 workers) and Oman (31 workers).

Foreign Trade

GOIC’s report also tackled foreign trade in the paper industry. It explained that GCC countries import large quantities of pulp, paper products and paperboard. In fact, GCC imports of these products in 2015 equalled approximately 3.6 million tonnes and amounted to around 3.9 billion USD. Saudi Arabia was ranked first in the GCC in terms of imports (48% of the total imports and 47.4% of the total value), followed by the UAE (32.4% of the total imports and around 32.3% of the total value). Thus, the two countries’ share was about 80% of the total GCC imports.

Moreover, GCC exports in 2015 reached approximately 939000 tonnes valued at more than 1.3 billion USD. Hence, the net imports amounted to approximately 2.7 million tonnes with a value of about 2.6 billion USD. Saudi Arabia’s share of the total net imports was 43.4%, followed by the UAE (32.6%), Kuwait (12.8%), Qatar (6.8%), Oman (2.7%) and Bahrain (1.7%).

GCC countries import many types of paper and paperboard, mainly paper, coated paperboards in rolls or sheets, and paper, unglazed craft paperboard and vaulted paper etc.

As a matter of fact, in spite of the development of digital media and information networks, paper, paper products and cardboards remain necessary for all aspects of life: Gulf markets are increasingly demanding these products, notably administrative, education, cultural and media institutions and authorities that use papers, stationery and office supplies. In addition to that, more businesses are demanding paper products used in wrapping, packaging, transportation, advertising and marketing etc.

Therefore, the demand for paper products and paperboards is expected to increase in the GCC as a result of the growing population and health awareness of consumers, and growing economies and education levels as well.

Furthermore, the printing sector’s various fields (commercial, advertising, administrative, reports, books, notebooks etc.) show an increasing demand for paper and cardboards in the Gulf. There is also an increase in the demand for corrugated paperboard and craft paper as a result of the economic growth, the advance of the packaging industry, the increasing demand for hygiene paper, particularly big paper rolls coupled with the demographic boom and the rising consumer awareness.

Moreover, the recycling industry is very important in the GCC region and there is big room for the expansion of this industry that is capable of providing promising investment opportunities. Indeed, the recycling consumption markets are big and so are its economic benefits such as limiting the need for raw materials imports, providing more job opportunities, and guaranteeing good return for the entrepreneurs. In addition to that, recycling is inexpensive, energy efficient and recycling of waste paper in particular increases the proceeds from pulp compared to other raw materials. Investments can also be made in projects to collect, sort and press paper waste and sell it to factories.

Finally, there are several recycling industries in different GCC countries, but this industry faces a number of obstacles hindering its expansion throughout the GCC such as: the absence of large areas necessary to store and collect paper waste and others, the need for skilled workers and the lack of necessary quantities of paper waste for factories to become operational. In fact, despite the large quantities of paper waste that can be beneficial for the recycling industry, only a small share is available.