Vietnam’s plastics industry lures foreign investors

The Hanoitimes – Vietnamese plastics industry is increasingly attractive to foreign investors as the potential of the industry remains large, experts said.
According to the Vietcombank Securities Company, the average plastic consumption in Vietnam is currently 41kg/person/year, lower than the Asian region’s average of 48kg/person/year and the global average of 70kg/person/year.
BMI Research also reported that the food industry will grow 10.9 percent in 2015-2019, and the bottled beverage sector will grow 17-25 percent. The industries’ high growth rates will help boost the rise of the plastics industry.
In the coming time when the Vietnam-EU Free Trade Agreement (VEFTA) is signed, the export market of plastic products to Europe will be strengthened.
According to the Vietnam Plastics Association, the demand for importing plastic products in EU market is assessed to be high, and Vietnamese businesses have good penetration ability. 
Noticeably, in the EU market, Vietnam’s plastic products are not subject to anti-dumping tax like other Asian countries, which are suffering an average tax of 8-30 percent.
Despite such potential market, currently, domestic businesses have not mastered input materials. The Ho Chi Minh City Rubber Association forecasts that by 2020, materials to produce plastics will amount to five million tons and Vietnamese firms will have to import some 70-80 percent of the materials. The significant dependence on the import materials will cause the local firms difficult to utilize the VEFTA’s tax incentives because of regulations on origin of goods, which will reduce their competitiveness.
Seeing the shortcomings of Vietnamese plastics firms and the potential of the market, foreign investors, especially Thai ones, have continuously entered the local market.
On March 9, the State Capital Investment Corporation (SCIC) offered for sale the entire 24.1 million shares of Binh Minh Plastics JSC (coded BMP) and Thailand’s The Nawaplastic Industries (Saraburi) Co. Ltd bought most of the shares.
With the successful transaction, The Nawaplastic Industries raised the ownership rate at BMP to nearly 50 percent.
Nawaplastic is the manufacturer and distributor of PVC pines, wholly owned by Thai Plastic and Chemicals PCL (TPC). TPC currently possesses 50 percent stake in Thailand plastic market and many other companies in Vietnam’s plastic industry such as Chemteck Co (production of polyethylene XLPE TPC with 100 percent stake); Viet-Thai Plastchem (production of Plastics and Packaging TPC with 72.49 percent stake); TPC Vina Plastic and Chemicals (production of PVC-TPC with 70 percent stake).
Following TPC was the parent company Siam Cement Group (SCG) who has the ambition of building value chain in Vietnam plastic industry. Currently, SCG owns a plastic pellet company (TPC Vietnam) and has for a long time wanted to have another plastic product manufacturing business with good distribution network in Vietnam.
SCG has recently officially launched petrochemical project in Long Son with the scale of $5.4 billion aiming at completing its value chain and as such, the output will be BMP’s products.
SCG’s investments over the last period have shown positive results. Typically was the investment in Tien Phong Plastic through The Nawaplastic Industries. With the capital withdrawal from Tien Phong Plastics, The Nawaplastic Industries earned about 1.460 trillion dong, three times higher than the initial investment value. In addition, according to calculations, in more than five years of investment, The Nawaplastic Industries also received about 173 billion dong dividend in cash from Tien Phong Plastics.