Major obstacles to the sustainable growth of Vietnam’s plastic industry

The plastic industry is considered a dynamic industry in the Vietnamese economy. Vietnamese people prefer to use plastic products in daily life, especially plastic packaging. Besides, the plastic industry also faces many difficulties because it has not been active in the source of input materials.

Overview of the plastic industry in Vietnam

In Vietnam, the plastic industry is still young compared to other long-standing industries such as mechanical engineering, electricity – electronics, chemicals, textiles, etc., but has had a strong development in recent years. Plastic industry in the period 2010 – 2023, is one of the industries with the highest growth in Vietnam with an annual increase of 16% – 18% (only after the telecommunications and textile industries), there are fast products.

With a fast development speed, the plastic industry is being considered as a dynamic industry in the Vietnamese economy. That growth comes from a wide market, because plastic products are used in all areas of life including plastic packaging products, plastic building materials products, household plastic products and high-tech plastic products.

Currently, plastic products of Vietnam are present in nearly 160 countries. The traditional export markets of Vietnamese plastic companies are Japan, the US, some European countries (Germany, the Netherlands…) and ASEAN (Cambodia, Indonesia, the Philippines…).

Recently, Korea has become a new major export market for Vietnamese plastic exporters. Plastic products in Vietnam are divided into 4 main groups, including packaging plastics, household plastics, construction materials and engineering plastics.

Up to now, the whole plastic industry in Vietnam consists of more than 2,000 companies stretching from the North to the South and mainly concentrated in Ho Chi Minh City (more than 84 percent in HCMC). Domestic companies accounted for 85%, foreign companies only accounted for 15% in number, but accounted for 40% of investment capital.

Despite the development, Vietnam’s plastic industry is still mainly known as an economic and technical industry in plastic processing, while it is not fully active in the source of input materials when producing.

Currently, each year the Plastic industry needs about 4.5-5 million tons of input materials such as PE, PP, PS, PVC… while the domestic capacity can only meet about 1 million tons of raw materials and chemicals. additives for the needs of Vietnam’s plastic industry.

Difficulties of Vietnam’s plastic industry if it is not active in input materials

Currently, the plastic industry is only active about 20% of input materials as well as chemical additives. If they can’t take the initiative to source raw materials soon, this will be a big obstacle for companies in the plastic industry.

The main input materials of the plastic industry are PE, PP, PVC, PS and PET plastic powders and granules, which are produced mainly from oil, gas, and coal. . In which, 75%-80% of input materials for plastic production must be imported because the current domestic supply can only meet about 1 million tons of raw materials (mainly PVC, PET, etc.). and PP). In particular, lacking the supply of recycled plastic materials, the supporting industry for the plastic industry has not yet developed.

This situation causes production and business activities to be interrupted. Even the increased financial costs, the risk of exchange rate changes and world oil prices. This is a common feature of Vietnam’s plastic industry and is unlikely to change in the next few years.

In addition, the price of imported plastic materials often fluctuates in proportion to changes in oil prices, creating risks in input costs and affecting business results of domestic companies.

Most of Vietnam’s plastic products are in the low-end segment, so small and medium-sized companies pay little attention to investing in modern technology and machinery. This poses a huge “obstacle” to the sustainable growth of Vietnam’s plastic industry.

In general, the number of plastic enterprises is large, but up to 80% of domestic plastic enterprises are of small and medium scale, with relatively limited technology, about 85% of equipment and machinery in the industry must be imported.

In the coming time, plastic enterprises need to actively restructure investment or strengthen research capacity, focus on investing in machinery, according to new technology standards; reduce dependence on foreign raw materials, diversify models, improve competitiveness in quality and reduce product costs…

Leave a Reply

Your email address will not be published. Required fields are marked *