The British Plastics Federation (BPF) has identified Vietnam as a key target for its export initiative in 2010 and will lead a British Group to the next Plastics and Rubber Vietnam show to be held between 18th - 20th March 2010 in Ho Chi Minh City. The BPF has arranged for the UK exhibitors to claim UK Trade & Investment grants of £1,400. Exhibitors will also benefit from assistance of the BPF in business matching with the Vietnam Plastics Association members. Justyna Jaworska, BPF Business Development Executive responsible for organising the British Group highlights the attractions and explains why it is important to explore the market at this stage.
Vietnam's economic overview
Even though the first quarter of 2009 has shown a slow down in Vietnam's economic growth to 3.1%, it is still one of the fastest growing economies in Asia with consistently growing GDP. The country, which is recognised as a High Growth Market by UK Trade &Investment (the Government body assisting UK exporters) imported over £117.9m worth of goods from UK in the first nine months of 2008. Great Britain is the third largest investor in Vietnam from Europe, with over 72 projects worth more than $2.5 billion, mainly in oil and gas.
Population 86968,000
Gross domestic product 241,80 (billion US$)
Growth rate of GDP (%) 6,20
Average per capita income 2,800 (US$)
Source: EUROMAP
The BPF is providing UK companies with an opportunity to explore the Vietnamese market during its early growth phase. Whilst not having the urban infrastructure of China's large cities or China's inter-city transport system, IT and telecommunication systems, Vietnam has potential in all these directions. The country has a youthful and IT- hungry population and an urban infrastructure dating back to French-colonial era, desperately in need of refurbishment.
Plastics industry in Vietnam
The plastics industry is high on the agenda of the Vietnamese Government and the Ministry of Industry has established several key investment programmes with the aim of stimulating growth specifically in the production of high-tech plastic parts and developing the recycling industry.
The plastics industry is expected to grow up to 18% by 2010 when production will hit 4.2 million tonnes, double the level of 2007. It is predicted that Vietnam's production output of plastics per capita will increase from 25kg in 2005 to 40kg by 2010.
Source: Vietnam Plastics Association (VPA)
It is estimated that there are around 2,700 plastic companies in Vietnam, of which 80% are privately owned small and medium enterprises.
Whilst the scale of the plastics industry in Vietnam is smaller than its competitor markets, such as China or Malaysia, it is growing at a higher rate - around 30% in recent years. Indeed between 2000 and 2007 the per capita consumption of plastics (kg) has doubled from 12kg to 22kg. This growth rate has made plastics the third fastest growing sector after coal and rice.
The vast majority, nearly 80 per cent, of Vietnam's plastics industry is focused in or around Ho Chi Minh City (formerly known as Saigon) which is why Plastics and Rubber Vietnam takes place there.
Until recently, most of the production concentrated on domestic items with a heavy concentration (over 50 per cent) towards packaging goods, followed by construction and pipes. The trend, however, is changing and there is a growing demand for high-tech plastics products.
Until 2004, Vietnam used only virgin plastics, but with the rising demand for plastics and domestic supply of materials covering just 30 per cent of the need, the government allowed the import of plastics scrap making the country Asia's second largest plastics used plastics material importer.
In addition, the import of virgin materials is at a high rate totalling between 1.5 and 2 mt a year. The country depends heavily on the import of polyethylene (PE), polypropylene (PP), polyvinyl chloride E (PVCE) and polystyrene (PS).
The plastics industry in Vietnam is highly labour-intensive due to the unskilled staff and lack of professional training. It also lacks technology and know-how with many of the polymer manufacturers using out of date equipment imported from China, South Korea and Taiwan. Most of the machinery is imported and it is predicted that a further $3 billion worth of machinery will be purchased between now and 2010. Machine manufacturers should bear in mind that most of the purchases are by small and medium sized companies.
There are two plastics Trade Associations in Vietnam: Vietnam Plastics Association (VPA) with over 800 members and Vietnam Saigon Plastics Association (VSPA). The British Plastics Federation sits alongside the VPA as members of the Council of International Plastics Association Directors (CIPAD).
The main players in the Vietnamese plastics scene are The Vietnam Plastics Corporation (VINAPLAST) which controls 20% of the domestic market. VINAPLAST owns 19 smaller companies engaged in converting, toolmaking, materials trading and services. The other large companies are Tan Dai Hung, Tan Tien and top injection moulding companies such as Sai Gon Plastic Co, Binh Minh Plastic Co and Phat Thanh Co.
The Future
The Vietnamese Government has announced five petrochemical projects to take place between 2009 and 2016 enabling the refineries to process oil, which is found along the coast. This will also allow Vietnam to produce gasoline, which it is lacking. The Vietnamese government aims to create 'Asia's future petrochemicals hub' with the first refinery complex of Vietnam, Oil and Gas Corp built in Dung Quat. The first polymer relevant project started in September 2008 in Long Son near Ho Chi Minh City, due for completion in 2013 at a cost of USD 3.77bn. By 2016 it is planned to have a full capacity production of 1.5 mt annually of PE and PP and 800,000 t of other basic chemicals.
