Dubai: The paper industry in the UAE, while growing, is facing fierce competition from India and China, leading to a price war among businesses, according to exhibitors at Paper Arabia 2015 conference which kicked off in Dubai on Monday.

“It [the paper industry] is growing at around 7 per cent a year because consumption is growing. We are selling more,” said Abdul Rahman Al Utaibi, shared services general manager of the Saudi Paper Group, the company sponsoring the conference.

The event was inaugurated by Buti Saeed Al Ghandi, chairman of the board of directors of Emirates Investment and Development PSC, UAE, and managing director of the Al Ghandi Group.

The UAE consumer paper and board packaging market is valued at $500 million (Dh1.83 billion). According to Satish Khanna, the head of Al Fajer Information and Services, the conference’s organisers, the growth of paper consumption is due to innovation from the packaging industry.

According to the organisers, newsprint represents 12 per cent of consumption of the overall general commodity paper in the UAE. This includes newspapers and magazines.

Exhibitors focused on the importance of technology within the industry, revealing that paper mills had increased in the UAE due to innovation in the field. However, despite the growth in the industry they face challenges related to competition from Chinese and Indian companies who offer similar products at much lower prices.

“Our cost here is higher than there. They [the UAE] increased last January the cost of electricity and water. We work 24 hours. This has created problems for us. We also pay higher salaries here than in China and India. At the end, the cost of the product here is higher than theirs. We have quality but the end users don’t go for quality but price,” said Hamdi H. Ahel, QHSE manager at Abu Dhabi National Paper Mill (ADNPM).

ADNPM is one of the companies in the UAE exporting its products. Hamdi said that they export more than 80 per cent of their output.

ADNPM exports to other countries within the GCC, Africa, Jordan, Morrocco, Iran and other places around the world.

“We used to produce 60,000 tonnes [worth of products] per year. We are adding a third machine with new technology called New Texture Tissue (NTT) which will produce 90,000 tonnes per year. This is a high quality bulky paper,” Hamdi said.

Medhat Fawzy, the sales and marketing manager at Queenex Hygiene paper manufacturing, said that the total capacity for the market here in the UAE stands at about 130,000 tonnes per year. He explained that it is easy for companies to reach this figure.

“There is a price war with the competition coming from outside. They have many factors that will help them decrease the cost. Also the country [UAE] is not subsidising the cost. For example in Egypt, there is a fierce competition but the government is subsidising all paper by 70 per cent, which is very efficient,” Fawzy said.

Hamdi from ADNPM added that in terms of competition, he and other officials at the ADNPM had called on the Ministry of Economy to regulate competition.

(Omnia Ibrahim is a trainee at Gulf News)