Annual growth rate of plastics industry

- Jan 16, 2020-

At the start of the year, Vietnam was "eager" to report on last year's economic performance.

7.02 percent GDP growth, 11.29 percent manufacturing growth...

Just look at the data and you can see the dynamic dynamic of this developing country in southeast Asia.

More and more manufacturing factories, more and more big brands landed, coupled with the Vietnamese government's active investment policies, making Vietnam gradually become a new "world factory", but also become a new base for the plastic processing industry and related industrial chains.

Investment and consumption have led to double-digit growth in the plastics industry

Vietnam's GDP grew by 7.02 percent in 2019, exceeding 7 percent for the second year in a row, with the growth rate of processing and manufacturing leading all industries, with the annual growth rate of 11.29 percent, according to data released earlier by the general administration of statistics.

The Vietnamese authorities say the manufacturing sector needs to grow by 12 percent by 2020.

In terms of imports and exports, Vietnam's total import and export volume for the year exceeded us $500bn for the first time, reaching us $517bn, with exports of us $263.45bn, a surplus of us $9.94bn.

Vietnam aims to export a total of $300 billion by 2020.

Domestic demand was also strong, with retail sales up 11.8 per cent, the highest level between 2016 and 2019.

In terms of attracting foreign investment, Vietnam attracted 38 billion us dollars, the highest level in a decade, and utilized 20.38 billion us dollars, a record.

The combination of vibrant industries, cheap Labour at home, land and tax revenues and port advantages, and Vietnam's open-door policy (it has signed more than a dozen free-trade agreements with other countries and regions) has made Vietnam a market magnet for south-east Asia.

Many foreign investors will focus on Vietnam, a hot destination for investment. Multinational giants such as Nike, adidas, foxconn, samsung, Canon, LG and SONY have entered the country.

Robust investment and consumer markets have led to a boom in various manufacturing sectors, particularly the plastics processing and manufacturing sector, which has maintained an average annual growth rate of 10-15% over the past decade.

The input demand of raw materials and technical equipment is large

Vietnam's booming manufacturing sector has led to huge demand for raw plastic materials, but Vietnam's domestic demand for raw materials is limited, so it relies heavily on imports.

According to the Vietnam Plastics Association, the country's Plastics industry needs an average of 2 million to 2.5 million raw materials a year, but imports between 75 percent and 80 percent of its raw materials.

In terms of technical equipment, since most enterprises in the local plastic industry in Vietnam are small and medium-sized enterprises, they are mainly dependent on imports in terms of technology and equipment, so there is a huge market demand for technical equipment input.

Many machine equipment enterprises, such as Chinese plastic machinery manufacturers such as haiten, yizhi, bochuang, jinwei, have set up local production bases, stock warehouses, subsidiaries, after-sales service points, on the one hand to take advantage of low cost, on the other hand to meet the local market demand.

55. The PNG

Haitian is located in the second phase of Singapore industrial park in binh duong province, Vietnam

Plastic packaging industry is pregnant with huge business opportunities

Vietnam has many advantages in the plastic packaging industry, such as strong participation from foreign suppliers of machinery, equipment and products.

At the same time, due to the increasing per capita consumption of plastics in Vietnam, the domestic plastic packaging market is also in great demand.

Currently, Thai, Korean and Japanese companies account for 90 per cent of Vietnam's plastic packaging market, with advanced technology, cost and export market advantages.

In this respect, Chinese packaging enterprises need to fully grasp the market opportunities, improve technology and quality, and strive to take a share of the packaging market in Vietnam.

In terms of the export of packaging products, the United States and Japan account for 60 percent and 15 percent of Vietnam's plastic packaging exports, respectively. Therefore, the entry into Vietnam's packaging market means an opportunity to enter the packaging supplier system of the United States and Japan.

In addition, local enterprises in Vietnam are not mature enough in packaging technology to meet the increasing demands of consumers, so there is a great market demand for the input of packaging technology.

For example, consumers increasingly prefer to choose high-quality and versatile packaging for food storage, but only a few local companies are able to do so.

Take milk packaging as an example, at present is mainly supplied by foreign enterprises;

Vietnam also relies heavily on foreign companies to produce non-permeable PE paper bags or zipper bags.

These are the breakthrough that Chinese packaging company can cut into Vietnam plastic market.

Meanwhile, demand for plastic imports from the European Union and Japan remains high, with customers increasingly turning to Vietnamese plastics.

In June 2019, Vietnam signed a bilateral free trade agreement (EVFTA) with the European Union, paving the way for a 99 percent tariff reduction for goods between the eu and southeast Asian countries, which will create opportunities to promote exports of plastic packaging to European markets.

In addition, it is worth mentioning that in the new wave of circular economy, green packaging technology, especially energy saving and emission reduction technology will become more popular in the future.

For plastic packaging companies, this is a huge opportunity.

Waste management as a key development market

Vietnam produces about 13 million tons of solid waste annually, one of the top five producers.

The amount of municipal solid waste produced in Vietnam is increasing by 10-16% a year, according to the country's environmental authority.

Production of hazardous solid waste continues to increase as Vietnam speeds up industrialization and urbanization, as well as construction and mismanagement of landfills.

About 85 per cent of Vietnam's waste is currently buried untreated in landfills, with 80 per cent of it unsanitary and polluting, so effective waste management is urgently needed.

In Vietnam, investment in the waste management industry is increasing.

So what are the opportunities in Vietnam's waste management market?

First, the need for recycling technology.

Most local recycling and recycling enterprises in Vietnam are family enterprises or small enterprises with immature technology;

State-owned enterprises are also mostly using foreign technology, with only a handful of large multinationals with subsidiaries in Vietnam having their own technology.

Most waste management technology suppliers are from Singapore, China, the United States and European countries.

At the same time, the utilization rate of recycling technology in Vietnam is still low, mainly focusing on hardware products, and there is a lot of room for exploration in the market of recycling other types of products.

In addition, with the increasing economic activity and China's ban on waste plastics, Vietnam has become one of the four largest exporters of waste plastics in the United States. The huge volume of waste plastics needs to be handled, which requires a variety of effective management techniques.

In terms of waste plastic management, recycling is considered an urgent requirement in waste management in Vietnam and an effective option to reduce waste entering landfills.

The government of Vietnam also welcomes and actively participates in the commercial activities of waste plastic management.

The government is actively exploring innovative approaches to solid waste management, such as encouraging the development of waste-to-energy technologies to make the best use of waste and turn it into useful resources. This has further stimulated the vitality of waste management and created business opportunities for external investment.

The government has also actively promoted waste management policies, such as the national waste management strategy, which provides a detailed framework for building a circular economy, with the goal of achieving full waste collection by 2025. This will lead to policy guidance for the recycling industry, which will lead to growth.

In addition, it is worth mentioning that international brands have also joined hands to promote the development of circular economy in Vietnam.

For example, in June 2019, nine well-known enterprises from the consumer goods and packaging industry formed the package recycling organization (PRO Vietnam) in Vietnam, aiming to promote the circular economy and improve the recycling and sustainability of packaging.

The nine founding members of the alliance are Coca-Cola, FrieslandCampina, La Vie, nestle, NutiFood, suntory Pepsi, tetra pak, TH group and URC.

PRO Vietnam marks the first time these companies have worked together to improve Vietnam's environment.

The organization promotes recycling through four major initiatives, such as promoting recycling awareness, improving the collection ecosystem of discarded packaging, supporting recycling programs for processors and recyclers, and working with governments to promote recycling activities, creating opportunities for individuals and businesses to recycle post-consumer packaging.

The members of PRO Vietnam hope to collect, recycle and recycle all packaging materials put on the market by 2030.

All these have brought vitality to the waste plastic management industry, and promoted the standardization, scale and sustainability of the industry, thus bringing development opportunities for enterprises.