Plastic Industry in Vietnam

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Vietnam’s plastics industry is being evaluated as potential sectors with the maintaining stable growth rate of 16% – 18% during the last 5 years.

Due to benefit from a reduction of raw material and an increase in demand for plastic products, plastic manufacturing businesses have had experience strong growth.

10 plastic business on the stock market has had a successful year of 2015 with a total revenue of 13 trillion, increased 15% and net profit of approximately 1.1 trillion, increased 30% compared to 2014.

Besides, the business transaction in the quarter I/2016 was also very positive, with total revenue and profits reached 3.1 trillion and 367 billion respectively, increased 20% and 78.1% respectively compared to the same period of 2015. Therefore, the local enterprises have been expanding the production capacity.

In the past 3 years, there has been an impressive, reaching 15% -17% per year.

According to the reports of BIDC Security Company (BSC) in 2016, the demand for plastics in 2016 is forecasted to keep growing. This is based on factors such as the consumption of plastic per capita will increase and reach 45 kg / person / year in 2020. Also the recovery of real estate and construction industries in the near future will promote the consumption of plastic products.

Besides, the trend of moving production to Vietnam and increasing foreign direct investment will lead to the growth of technical plastic. Also raw material prices continue to drop, thus helping plastic manufactures to be more active in their production.

Due to many favorable factors of business environment, the plastics manufacturers have invested in the scale of manufacturing capacity. It is mentioned that An Phat Plastic (AAA) has been building 2 plants: No. 6 (with a capacity of 3,000 tons / month) and No. 7 (capacity of 800 tons / month), which specializes in exporting bio-plastic bags to the markets such as Japan and the US.

In June 2015, HCD investment and commercial joint stock company planned to invest new production line of bio-plastic bags (similar technology to AAA) in Q3 with capital of over 100 billion after a significant increased im profit.

Meanwhile, Binh Minh Plastics (BMP) has put Long An Factory in operation since the end of 2015 to meet greater domestic consumption. Tien Phong Plastic has approved the merger of Five Star Plastics to launch the manufacture (Phase 1) in the central of Vietnam with a capacity 10,000 – 15,000 tons / year.

East Asia Plastics (DAG) also putprofile sheet production plant into operation in 2015 with the expectation to become a leader of plastic used in construction and adverting material.

Besides the expansion of the plants, the domestic enterprises have also focused on M & A to strengthen and expand market share such as Plastics Phat holds 30% stake of Plastic Packaging Vinh (VBC) or Dong Nai Plastics (DNP ) acquires Tan Phu Plastic (TPP)…

Thai enterprise desires for plastic enterprises in Vietnam.

From 1990 to present, the consumption of plastic Vietnam has shown rapid growth which proves that the demand for plastic products in Vietnam would be fertile land for enterprises’ exploitation. Besides, Vietnam has joined the Trans-Pacific Partnership (TPP), investors are pouring into this country to take advantage of this.

Siam Cement Group (SCG) in Thailand has invested in more than 20 plastic companies in Vietnam in which 20% share of Binh Minh Plastic and 23.8% share of NTP – 2 current market leader in plastic used inconstruction. Last year, SCG bought 80% stake of Tin Thanh Plastic Company – top 5 manufacturers of plastic packaging in Vietnam.

SCG and other Thai corporations are continuing to purchase plastic companies in Vietnam. Some Thai companies have shown strong interest in acquiring all the shares that the state divested in plastic enterprises in 2016. Therefore, certainly, Vietnam will have to witness many of the other acquisitions of Thai companies in plastic industry and many other industries. According to published information, SCG will spend total of 5-6 billion USD for M&A in Vietnam by 2020.

Many experts, in the coming period, the plastic industry will maintain high growth rates in both revenue and profitability due to a series of trade agreements signed. However, if local enterprises are not alert, they will lose this piece of bread into the hands of the Thai people as it has currently happened to the retail industry in Vietnam.

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