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Thailand striving to upgrade its plastics industry
Source:    Author:By Sofie Chong    Date:18.Jun.2019

Thailand is strengthening its role as an important global hub of plastics manufacturing, with makers placing greater emphasis on value-added and environment-friendly products.

Active in everything from smartcards to furniture, the Thai plastics industry is growing consistently, and demand in the vigorous domestic economy is the key driver.

The plastic production industry has grown rapidly with over 5,000 companies operating in Thailand, comprising converters and fabricators, mold and machine manufacturers, compounders, and petrochemical producers. Its annual plastic consumption is 40 kg per capita, one of the highest in the ASEAN region, according to Plastic Institute of Thailand.

In addition, with a number of incentive schemes launched by the government, the Thai plastic industry is attracting investments from domestic and abroad. Many of the global manufacturers who utilize Thailand as a production base rely on the country’s logistics infrastructure, which connects it to a wider network across other ASEAN countries.

Distribution of plastics consumption

According to a report by Messe Düsseldorf, Thailand’s plastics consumption is led by packaging (48%), electronics (15%), construction (14%), and automotive (8%).

Packaging

The Thai packaging industry is expected to grow to 63.1 trillion units in 2020 from 51.3 trillion units in 2017, registering a CAGR of 4.2%, said Global Data research.

Ongoing urbanization played a key role in the development of packaging across product categories in the Thai market. The disruption of traditional lifestyles and the fast pace of urban living drive the demand for greater convenience, encouraging the development of packaging that is easy to use.

The plastic packaging market is expected to gradually favor the use of flexible solutions over rigid plastic materials owing to several advantages they offer such as better handling and disposal, cost-effectiveness and greater visual appeal.

The FMCG sector is expected to further bolster the demand for flexible solutions, by ensuring wide adoption in the food & beverage, retail and healthcare sectors.

In addition, as one of the largest e-commerce markets in Southeast Asia, the country generating revenues of US$2.1 billion in 2015, amassing a steep increase in the consumption of plastics for the packaging industry.

Some leading manufacturers have introduced numerous innovative plastic packaging in order to achieve sustainability agenda. Mitsubishi Chemical Corporation (MCC) announced that Japan Pulp and Paper Co., Ltd. will launch sales of paper cups made with Thailand-based PTT MCC Biochem Co., Ltd.’s BioPBS plant-derived and biodegradable plastic in October 2018.

This environmentally friendly material is broken down by living microorganisms in soil and decomposes into water and carbon dioxide. Based on the material’s high heat resistance, high flexibility, and high heat seal strength as well as its biodegradability, Japan Paper and Pulp decided to use it as the laminate on the inner surface of paper cups in place of conventional polyethylene.

Automotive

Thailand, dubbed as the Detroit of Asia, has become the largest producer of vehicles (commercial and passenger vehicles) in Southeast Asia, according to a study by Research and Markets. Automotive manufacturing has long been the pillar industry of the Thai economy. In 2017, the output value of automotive manufacturing accounted for more than 10% of Thailand's GDP.

In 2018, the country produced 2.16 million units, up by 9% from the previous year. For 2018, full year vehicle sales in Thailand increased 19.2% year-on-year to 1 million units.

T
hailand’s automotive sector attracts manufacturing opportunities, although its overall cost index (for example, energy, labor, and property) is 20 to 25% higher than Indonesia, Vietnam and the Philippines, largely because of a high quality and mature automotive manufacturing ecosystem, including tiered suppliers of automotive components.

Meanwhile, given the world’s tightening emission standards, Thailand is keen to expand its automotive manufacturing industry to produce green vehicles. Supporting this vision is the Eastern Economic Corridor (EEC) initiative that places a great importance on bringing next-generation automotive industry to Thailand, in particular, the electronic vehicle (EV) industry.
MG V80 for the Thai market was launched in March 2019.
With relatively advanced infrastructure as well as sophisticated upstream and downstream industries, Thailand is an ideal country for China to actualize its international industrial layout. Chinese investment in the country has been steadily increasing over the past few years. According to data from the Board of Investment of Thailand, Chinese direct investment in Thailand totals about US$ 800 million, making it the 6th largest foreign investor in Thailand.

Jiangsu General Science Technology Co. Ltd. (JGST), announced in September 2018, its plan to build a passenger and truck/bus tire plant in Thailand's Rayong Industrial Zone and is committing up to US$300 million for the project.

The plant is designed with capacities of 6 million passenger tires and 1 million truck/bus tires annually, the company said. Construction is slated to take 15 months, and the plant is expected to generate US$320 million in revenue when on full stream upon the third year of its operation.

JGST first proposed building an overseas plant in April 2018, in Cambodia, but has decided to change its location – a move to tap local demand and cheaper costs.

On the other hand, Chinese carmaker SAIC Motor has applied for a licence to produce EVs in Thailand. The company's local joint venture, SAIC Motor-CP, planned to produce both electric and plug-in hybrid vehicles at its assembly plant in Chon Buri province, east of Bangkok.

The factory already produced conventional internal combustion cars under the MG brand at its 100,000 units per year factory with output approaching just 24,000 units last year.

The company aimed to produce battery electric vehicles which it intends to sell locally and export to other ASEAN markets. It hoped to double output to around 50,000 units a year with the additional models.

Plastic ban: A challenge yet an opportunity

Thailand is among the top five Asian countries—alongside China, Indonesia, Vietnam and the Philippines—responsible for more than half of the 8 million metric tons of plastic waste dumped into the world’s oceans annually, according to a 2017 report by Ocean Conservancy.

In order to curb the increasing use of throw-away plastic and hopefully reduce the dumping of plastic waste into the sea, the Thai government has established a 20-year national strategy plan.

The strategy includes banning the use of thin single-use plastic bags by 2022, followed by single-use plastic cups and straws in 2025, according to plans drafted by the Pollution Control Department.

At the same time, the Thai government has set the country’s plastic recycling goal to recycle all its locally produced plastic waste by 2030, according to National Resources and Environment Minister Surasak Kanjanarat announced in a regional forum on waste management in March 2019.

Analysts believed that the ban in the country will serve as an opportunity to improve domestic management of plastic waste and invest in new technologies to produce recyclable plastics and bioplastics.

Aim to be a bioplastics hub in Asia

Worldwide consumption of bioplastics has increased more than 600% in the past decades and expected to reach 40% market share of global plastics market in 2030, according to a report by Ceresana. This remarkable growth is resulted from the global trend of environmental awareness.

Asia will continue as a major production hub. In 2021, it is expected that more than 45% of bioplastics will be produced in Asia, and a quarter of the global production capacity will be based in Europe.

As a land of agriculture, Thailand enjoys competitive advantages in the bioplastics industry. The richness of biomass, materials supply, research driven resources, and strong downstream industry demand.

Moreover, the country has invested US$60 million in bioplastics development over the past seven years, with the government pumping in 80% of this investment.
Total Corbion PLA's new 75,000 tons per year PLA plant in Rayong, Thailand.
With the unique combination of all the attributes necessary to be a successful site for bioplastics production, Thailand has become a premium investment destination of some international firms.

In December last year, Total Corbion PLA, a 50/50 joint venture between Total and Corbion, announced the start-up of its 75,000 tons per year PLA (Poly Lactic Acid) bioplastics plant in Rayong, Thailand.

The plant has successfully produced Luminy PLA resins. This bioplastic provides a valuable contribution towards the circular economy being biobased and biodegradable and offering multiple environmentally-friendly waste solutions.

The new facility will produce a broad range of Luminy PLA resins from renewable, non-GMO sugarcane sourced locally in Thailand: from standard PLA to innovative, high heat PLA and PDLA with unique properties.

Market outlook

The plastics industry roadmap of Thailand and a complete range of incentives by the Thai government to promote ventures in the plastic sector have fascinated more and more number of global plastics companies.

As Southeast Asia is being projected to turn into a large plastics manufacturing hub in the coming years, Thailand is preparing itself to become the area’s hub for plastics products and is striving to enforce its roadmap, and upgrade the plastics industry. A more extensive approach is sought to integrate innovative design and technology to maximize the value of plastics.

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