Thailand's SCG Packaging Pcl (SCGP) on Monday announced an 11.8 billion baht ($353.93 million) expansion in its packaging paper business in Vietnam, anticipating growth in demand.

A new facility will be built in Vinh Phuc province in northern Vietnam, to begin operations in early 2024, which will raise total production capacity to 870,000 tonnes of packaging paper per year, up from 500,000, SCGP said in a statement.

It will be run by Vina Kraft Paper, a joint venture between SCG Packaging and Japan's Rengo Company, of which SCGP holds 70%.

"Vietnam has strong domestic consumption and is an important export base in the region, a big draw for multinational companies to invest their operations there," chief executive Wichan Jitpukdee said.

Wichan anticipated Vietnamese demand growth of 6% to 7% annually until 2025.

SCGP, a unit of Thailand's largest industrial conglomerate, Siam Cement Pcl, said it would use cash and debt to finance the expansion.

The facility is the latest move by a Thai firm to expand in Southeast Asia, with Vietnam, a fast-growing country of 98 million people, among the most desirable.

Lender Bank of Ayudhya Pcl last month said it would acquire a consumer finance company, SHB Finance in Vietnam for $155 million.

The pandemic has hit Thailand's badly. In August, the government cut its 2021 economic growth forecast to 0.7 to 1.2% from 1.5 to 2.5%, the third time it has done so.

The Thai economy slumped 6.1% last year.

Vietnam's outlook was brighter with the government expecting up to 4% growth.