Thailand-based SCG sets Vietnam as backup packaging market

SCG and Duy Tan reached the deal on February 9

A few days ago, the Vietnamese packaging sector was shocked by the news that Duy Tan decided to sell 70 per cent of its stakes share to SCG after many years of negotiation.

The move took place right after the Thai player announced ownership of another local company, Bien Hoa Packaging JSC.

The two sides remain silent about the particulars of the deal. Nevertheless, according to a source of doanhnghieptiepthi.vn, SCG plans to initially purchase 70 per cent of five of Duy Tan’s 22 subsidiaries which focus on plastic and packaging.

Last year, along with the investment in Bien Hoa Packaging JSC, SCG also acquired UK-based Go-Pak Ltd., one of the leading foodservice providers in England, Europe, and North America which also has many manufacturing facilities in the southern part of Vietnam.

Over the years, SCG has been constantly pouring capital into the country. As of the end of last third quarter, its total investment in Vietnam reached nearly $4.2 billion, up 59 per cent on-year. With this figure, SCG has been one of the leading overseas investors in Vietnam, along the likes of Samsung, Lotte, LG, Intel, and Microsoft.

In comparison with the region, the Vietnamese packaging industry has great potential for growth. According to the Vietnam Packaging Association (VINPAS), the sector’s annual growth could reach up to 15 per cent, as much as a triple of the regional growth rate, which is about 4-5.5 per cent annually.

Meanwhile, the Thai packaging industry in on a decline, reflected by the decelerating annual growth figures. According to ResearchandMarket.com, the compound annual growth rate of the sector in 2018-2023 is forecast to be 3 per cent, while in previous years it was about 5 per cent.

“Decline in packaging will be largely influenced by the fall in the demand for tobacco and tobacco products,” noted the website.

Last April, the Thai packaging manufacturer also lowered the investment budget of the year to cope with the COVID-19 lockdown. Nevertheless, the company did not cut the budget for Long Son Petrochemicals complex worth $5.4 billion in Vietnam.

"The Vietnamese economy will continue to expand during the COVID-19 outbreak and this project will serve demand growth in the domestic market in the future," said Thammasak Sethaudom, SCG’s chief financial officer to Bangkok Post.