Plastics growth garners strong interest

Companies from India, Europe, and the US are increasing their presence in the Vietnamese plastics market Photo: Le Toan

Last week, a delegation of 43 Indian companies led by the Plastics Export Promotion Council of India (Plexconcil) paid a working visit to Vietnam to join a complete plastic exhibition known as Complast 2018. Indian companies showcased a variety of products for the plastics processing industry including raw materials, processing machines, and technologies.

K. Srikar Reddy, Consul General of India, said that India’s plastics industry has developed a complete product supply chain, high-quality plastic materials, and manufacturing equipment at globally competitive prices. Thus, India could become an important supplier of plastic materials and plastic manufacturing equipment at low costs to Vietnam.

India exports plastics to more than 185 countries. In the current financial year 2017-2018, plastics exports are expected to grow by 6 per cent, reaching a turnover of $8 billion. India’s total plastics exports to ASEAN reached $533 million in the 2016-2017 period. Indonesia, Vietnam, and Thailand were the top export destinations, with India’s plastics exports to Vietnam valued at $109 million.

Ravinda Limaye of manufacturer Polygel said that opportunities are huge in the market. As the plastics and packaging sector grows, the company intends to continue importing materials and equipment to manufacture plastics. Vietnam imports about 80 per cent of the required raw materials annually, as the domestic market can supply only 900,000 tonnes per year.

“Polygel manufactures various catalysts and additives for plastic pipes, so we see Vietnam as a target market for expansion in the near future,” he said, noting that Polygel is looking for local distributors to export its products to Vietnam.

Ho Duc Lam, chairman of the Vietnam Plastics Association, said that the plastics sector in Vietnam will continue to grow on the back of a strong growth in domestic demand. Plastics consumption per capita is projected to increase to 45 kilogrammes in 2020, mainly due to growth in the packaging and construction segments.

In addition to Indian investors, Vietnam’s plastics and packaging industry has been on the radar of other Asian investors from Thailand, South Korea, and Japan in recent years. These Asian investors prefer striking up deals with local partners, which has resulted in an increase of mergers and acquisitions in the field.

Lam noted that an increasing number of European and US investors have also upped their presence on the domestic market. Unlike Asian investors, the Western companies prefer to develop their own facilities in Vietnam rather than acquire local assets.

Many European companies have set up representative offices in Vietnam to sell machines and equipment for the plastics and packaging industry. In October, Switzerland’s Tetra Pak began construction of a packaging manufacturing facility in Vietnam-Singapore Industrial Park in the southern province of Binh Duong.

“The capital inflow into the field shows no signs of slowing down. Indeed, the flow of foreign direct investment capital into Vietnam’s plastics and packaging sector has increased by 15 per cent year-on-year, which is in line with the robust domestic demand in the market, “ Lam added.