Plastics industry seeks lower dependence on material imports

10:15 | 18/06/2019 Industry

(VEN) - International integration and the Fourth Industrial Revolution (Industry 4.0) are expected to create great opportunities for Vietnam’s plastics industry to achieve a higher growth rate. However, the industry is encountering difficulties, especially related to raw materials.

plastics industry seeks lower dependence on material imports

According to the Vietnam Plastics Association (VPA), free trade agreements (FTAs) that Vietnam signed are providing many opportunities for domestic enterprises to export plastic products. Partners are gradually shifting their orders from China to Vietnam to take advantage of reasonable production costs and tax incentives. The demand for imported plastic products in the EU and Japan is high, while consumers in these markets increasingly prefer Vietnamese plastics to products of the same kind from other countries.

At a recent seminar themed “Plastic, printing and packaging industries - great opportunities of Industry 4.0”, economist Nguyen Minh Phong said the plastic industry has grown 15-20 percent annually over the past 10 years.

Economists said that although they have many development opportunities, domestic plastics enterprises are facing growing competition pressure and challenges related to technology development and product renovation.

Meanwhile, foreign invested enterprises have more advantages, as they possess advanced machinery and technology and automated complete production lines enabling them to minimize cost and maximize productivity. Moreover, they are strong at management and finance while benefiting from their parent companies’ support so they can accept a loss duration of three to five years, while a loss duration of only one to two years can kill domestic enterprises.

Vietnam’s plastics manufacturers import 75-80 percent of 2-2.5 million tonnes of raw materials that they need annually, with the raw material price accounting for 60-70 percent of the product cost. The dependence on raw material imports lowers their competitiveness and makes it difficult for them to benefit from tariff preferences, while persistent lack of raw materials causes them to fail in production plan fulfillment.

Domestic plastics enterprises need to take the initiative in investment restructuring, strengthen research and development (R&D), procure advanced machinery and technology, help develop the petrochemical industry to reduce dependence on imported materials, diversify products, improve quality-based competitiveness, and reduce product costs.

VPA Vice President Dinh Duc Thang said Vietnamese plastics enterprises imported machinery and equipment worth almost US$850 million per year from 2014-2018, showing their growing investment in technology renewal.

Economist Nguyen Minh Phong: Many leading Vietnamese plastics brands were sold to the Thais, Koreans and

Japanese, narrowing the market share of domestic enterprises with poor finance and design and technological

capability.

Nga Quynh