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Vietnam’s plastics industry to see strong growth
Source:Adsale Plastics Network    Author:Vivi Wan    Date:29.Apr.2020

Data recently released by the General Statistics Office of Vietnam showed that the country’s GDP growth has reached 7.02% in 2019. In particular, with an annual growth rate of 11.29%, the manufacturing and processing sector is driving the economy. The Vietnamese government is targeting to boost the growth rate of the sector to 12% in 2020.


Vietnam’s total value of import and export surpassed US$500 billion for the first time in 2019, reaching US$517 billion, of which the value of export was US$263.45 billion, and the surplus was US$9.94 billion. Vietnam's goal for the total value of export this year is US$300 billion.


Domestic demand in Vietnam remains strong. The total retail sales of consumer goods recorded an increase of 11.8% in 2019, the highest in three years. In terms of foreign investment, Vietnam attracted US$38 billion of foreign investment during the same year, the highest in the past decade. Meanwhile, US$20.38 billion of foreign investment was utilised, hitting a record high.


Thanks to the prosperity shown in many industries, the low labor and land costs and taxes, as well as the country’s open-up policy (Vietnam has signed more than a dozen of free trade agreements with other countries and regions), Vietnam has become one of the most attractive markets in Southeast Asian region.


Vietnam is quickly becoming the hotspot for foreign investors. Indeed, multinational giants such as Nike, Adidas, Foxconn, Samsung, Canon, LG, and Sony have already invested in the country.


The active investment and retail markets have driven the rapid development of various manufacturing industries in Vietnam. The performance of the plastics processing industry is particularly outstanding. In the past 10 years, the average annual growth rate of the Vietnamese plastics industry was about 10-15%.


Vietnam's booming manufacturing industry has driven huge demand for plastic raw materials. Due to a limited supply of raw materials in the country, Vietnam relies heavily on imports. According to the Vietnam Plastics Association, 75-80% of the plastic raw materials are imported.


At the same time, most enterprises in the plastics industry in Vietnam are small- and medium-sized, their production relies mainly on imported technology and equipment. Therefore, there is a huge market demand for technical equipment in the country.


Haitian established production capacity in Vietnam to meet the growing market demand.

Many Chinese machinery manufacturers, including Haitian (海天), Yizumi (伊之密), Borche (博創), Jwell (金纬), etc., have production facilities, warehouses and after-sales service locations in Vietnam. Apart from the cost advantage, they can also serve local clients better.


Good opportunities for plastic packaging


Vietnam has many competitive advantages in the plastic packaging sector, such as high-quality imported machinery and equipment, plenty of end products manufacturers, etc. In addition, with the increasing per capita consumption of plastics in the country, there exists a huge domestic plastic packaging market.


At present, Thai, South Korean, and Japanese companies account for 90% of the Vietnamese plastic packaging market share. They have the competitive advantages of modern technology, low cost, and export market share.


Regarding packaging products exports, the US and Japan account for 60% and 15% of the Vietnamese plastics packaging exports respectively. It means that entering the Vietnamese packaging market can also seize the opportunity to access the supply chain of the US and Japanese packaging sector.


Moreover, local companies in Vietnam are striving to satisfy the increasing requirements from consumers. There is a great market demand for advanced packaging machinery and equipment. For example, more consumers prefer high-quality and multi-function packaging for food packaging, but not many local enterprises are capable of making such packaging products, including non-permeable PE zipper bags.


Meanwhile, the demands for plastic products of the EU and Japan are still high, and more customers choose to source from Vietnam. In June 2019, Vietnam and the EU signed a bilateral free trade agreement, paving the way for significant reduction in tariffs and creating opportunities for promoting the export of plastic packaging products to the European market.


It is also worth noting that under the new wave of circular economy, sustainable packaging and recycling technologies will be increasingly adopted in Vietnam.


Waste management becomes a key developing market


Vietnam produces about 13 million tons of solid waste each year, and is one of the five countries that generate the largest amount of solid waste. According to the Vietnam Environmental Protection Agency, the amount of urban solid waste produced in the country is increasing by 10-16% annually.


With the accelerated industrialization and urbanization in Vietnam, and improper construction and management of Vietnamese landfills, the amount of hazardous solid waste continues to increase. At present, about 85% of Vietnam's waste is directly buried in landfills without treatment, 80% of which is unsanitary and pollutes the environment.


Vietnam urgently needs effective waste management to solve the problem, and investment in the waste management industry is increasing. What business opportunities are there in the Vietnamese waste management industry?


Given the current situation, there is high demand for recycling technology in Vietnam. Most local recycling enterprises in Vietnam are family-owned or small-sized ones with low-tech equipment, only a few big multinational enterprises with subsidiaries in Vietnam are operating with advanced technology.


In addition, the recycling rate of Vietnam is still low and recycling technology is mainly used for hardware products.


After China’s ban on waste imports, Vietnam has become one of the four largest countries for plastic waste exported from the US. The huge volume of plastic waste needs to be treated, which requires a bundle of advanced and effective recycling technologies.


The Vietnamese government also encourages and actively participates in business activities of plastic waste management. The government is promoting various innovative waste management models, such as converting waste to energy and other useful resources, and trying to create business opportunities for foreign investment.


At the same time, the Vietnamese government also actively promotes recycling through promulgation and implementation of policies. For example, the government formulated the national strategy for integrated solid waste management to provide a detailed framework for the establishment of a circular economy. The strategy aims at achieving comprehensive waste collection by 2025, and provides policy guidance for the Vietnamese recycling industry.


International brands have also joined forces to promote the development of Vietnam's recycling economy. In June 2019, nine leading enterprises in the consumer goods and packaging industries formed the packaging recycling alliance PRO Vietnam to promote the circular economy.


The nine founding members of PRO Vietnam are Coca-Cola, FrieslandCampina, La Vie, Nestlé, NutiFood, Suntory PepsiCo, Tetra Pak, TH Group, and URC. This alliance marks the first cooperation of these companies to help drive the circular economy and ensure packaging recycling is more accessible across Vietnam.


All of the above have brought vitality to the plastic waste management industry in Vietnam, promoting the standardization and commercialization of the industry, thus creating new business opportunities.



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