Market and product
Molding a Growing Plastics Industry
(VEN) - For recent years, the plastics sector has maintained stable growth of 20-25 percent despite fluctuations in material prices. In 2011 and in the near future, the plastics sector will continue to implement its targets.
Currently, Vietnam has about 1,064 plastic enterprises with capital ranging from VND500 million. These enterprises are largely located in the south, with 80 percent of enterprises being based in Ho Chi Minh City and surrounding provinces such as Dong Nai, Binh Duong and Long An while the remainder are from the north, central region and the Mekong (Cuu Long) Delta River. From 2005-2010, the plastics sector grew pretty rapidly at 20-25 percent per year. Total plastic production output reached 3.8 million tonnes in 2010 and export value hit USD1 billion. Export plastic products are present in more than 40 countries and territories world-wide such as the United States, European Union (EU), Africa, Middle East, Japan, Cambodia, Laos, Thailand and China. Many domestic enterprises, such as Long Thanh, Tan Hiep Hung and Tan Tien plastic companies, have promoted their brand names in the domestic market. Plastic material production has developed positively in recent years. For example, the TPC Vina Plastic & Chemical Corporation Limited in the Go Dau Industrial Zone (Dong Nai) has invested capital to raise its production output to 90,000 tonnes/year; the PP plastic material production plant in the Dung Quat Economic Zone has been recently began operating with output of 150,000 tonnes/year which has supplied high quality polypropylene resin.
Due to the strength in the plastic sector, members of the Ho Chi Minh City Plastic Association have maintained their activities towards ensuring sustainability, by attracting US$6 billion investment in renovating equipment and building new plants. Of this, the programs on enhancing management capacity, human resource training, the development of plastic and rubber products for export are among breakthroughs of the Ho Chi Minh City plastic sector.
Le Van Hien- Vice director of management board of the Duc Hoa Plastic Industrial Parks said that with US$100 million investment, 13 plastic plants in the industrial park had been built and reached total production value of VND800 billion in 2009. The figure increased to over VND 1 trillion in 2010 of which 15 percent was export value. Many high technical plastic products have been made such as solar batteries, robotics, high quality plastic and packing squeezers and export household plastic products.
Besides advantages, the plastics sector has encountered difficulties related to huge amount of imported material prices which make up 70-80 percent of the product prices, worth US$2.1 billion. Statistics show that since 2008, the plastics sector has withstood several material hikes which have affected domestic businesses. In addition, domestic product design and categories are simple which have not met various demands from importers and sectors which use high-technical plastic products.
Most plastics enterprises develop without planning, while private enterprises focus on making best-selling products resulting in overlap and inefficiencies, wasting capital and bringing little benefit.
Figures of the United Nations Commodity Trade Statistics Database (Comtrade) show that Vietnam has a high possibility of market infiltration and enjoys equal/lower tax level compared to other countries in almost markets. In addition, the high demand of the international market on plastic products in which average import growth reached 7 percent in the past five years will create big opportunity for enterprises to expand their business. However, the most challenging issue is the capacity to satisfy importer requirements in terms of volume and categories because local enterprises have limited capacity in these fields.
Nguyen Van Phuoc, Vice Director of the Ho Chi Minh City Department of Natural Resources and Environment said using recycled plastic material to protect the environment is among the requirements set out by importers from the United States and Japan. Tran Cong Quoc Trang, the President of the Ho Chi Minh Plastic Association added that in the near future, the association would focus on intensive activities and chose scientific and technological basis for sustainable development. It is estimated that in the third quarter in 2011, the association will complete the construction work of the Ho Chi Minh City Plastic Technical Center. In the mean time, it will cooperate with concerned sectors to develop the plastic and rubber industry to become a support industry as other advanced countries./.
