Overview
The plastic product manufacturing industry is one the fastest growing industries in Vietnam, sustaining an average growth rate of 15 to 20 percent annually during the last ten years. The industry’s total turnover was US$ 5 billion in 2008, up by 26 percent year-on-year. Vietnam produces a broad array of plastic products including packaging products, housewares, construction materials, electronic and electrical parts, motorbike and automotive components, and components for the telecommunication and transportation industries.
Increasing domestic and global plastic consumption will presents great growth potential for Vietnam’s plastic manufacturing industry for many years to come. The Government of Vietnam (GVN) has planned for its plastic manufacturing industry to grow at 15 percent/year in the period of 2006-2010. The Vietnam Plastic Association (VPA) estimated that in 2009 the domestic industry will reach an output of 3.2 million tons, up from 2.3 million tons yielded in 2008, and will export US$ 1 billion worth of plastic products, rising by 15.9 percent against 2008.
Vietnam is a net importer of plastic materials, additives, machinery and equipment to serve its plastic manufacturing needs. The country imports from 70 percent to 80 percent of its plastic materials, including more than 40 categories of materials and hundreds of additives. Vietnam imports virtually all of the equipment and machinery needed to manufacture plastic products, mostly from a few Asian and European countries.
The plastic material and machinery sector provides good sales prospects to U.S. suppliers of related materials and machinery. U.S. suppliers are highly respected in Vietnam for their advanced technology, high quality products and professionalism. U.S. suppliers of plastic materials and machinery will find good market potential for their products despite facing keen competition from other foreign suppliers from Taiwan, Korea, Thailand, Singapore, Japan, Malaysia, China, Germany and Italy.
Market Demand
Vietnam’s plastic manufacturing industry has sustained a particularly high growth rate thanks to the significant increase in both domestic consumption and exports since 2000. Plastic consumption per capita in Vietnam was only 1 kg/year in 1975 and remained static until 1990. Consumption per capita grew steadily until 2000 when each person living in Vietnam, on average, consumed 12 kg per year, and this trend has continued to the present, culminating with 2008’s figure of 34kg per person. The GVN expects consumption per capita to reach 40kg/year in 2010. This dramatic increase in plastic consumption per capita is, for the most part, attributed to a soaring foreign direct investment inflow, the robust growth of Vietnam’s manufacturing, construction and transportation sectors and the growing per capita income of the Vietnamese people, in the wake of the implementation of the “Economic Renovation” policy beginning in 1986.
In the meantime, the steady robust growth of plastic product exports has fueled the growth of Vietnam’s plastic manufacturing sector. Plastic products were one of the fastest growing exports in Vietnam in the last five years. While plastic exports are forecasted to grow at 15.9 percent in 2009, they grew at phenonmenal rates of 37 percent, 33 percent and 34 percent in 2006, 2007 and 2008 respectively.
Vietnam’s plastic products have great potential to perform well on the international market. The global plastic market had a total revenue of about US$ 400 billion in 2008. Of this, plastic materials accounted for 50 percent, semi-finished products 25 percent and finished products 25 percent. This market of finished plastic products, valued at about US$ 100 billion, continues to open up significant sales opportunities for Vietnam’s plastic product exports. Vietnam’s plastic products are quite competitive in global markets thanks to adaption of advanced manufacturing technologies, the existence of favorable tariffs and current good market penetration.
Vietnam exports plastic products to 55 markets around the world, including many nations in Asia, the Americas, Africa, Europe and the Middle East. The ten largest export markets for Vietnam’s plastic products are the United States, Japan, Cambodia, Germany, the United Kingdom, the Netherlands, France, Taiwan, Malaysia and the Philippines. There are 530 plastic firms in Vietnam active in export.
To meet strongly growing plastic manufacturing demand driven by the sharp increase in both domestic consumption and exports, Vietnam has to import more and more plastic materials as well as manufacturing equipment and machinery.
The country imports roughly 70 percent – 80 percent of the total materials needed for its manufacture of plastic products. According to the VPA, only three hundred thousand tons of plastic materials, mostly PolyVinyl Chloride (PVC) and Polyethylene Telephthalete (PET), are domestically supplied while the country needs to import up to 1.6-1.7 million tons of plastic materials per year plus hundreds of additives to serve its rapidly growing manufacturing needs. Vietnam’s plastic material imports have been growing at 16 percent/year since 2000. In 2008, Vietnam-based plastic firms imported 1.7 million tons of plastic materials worth approximately US$3 billion. Of the total plastic material imports, Polypropylene (PP), Polyethylene (PE) and Polystyrene (PS) accounted for roughly 39 percent, 27 percent and 8 percent respectively.
Vietnam’s major sources for plastic materials include Taiwan, Korea, Thailand, Singapore, Japan, Malaysia, the United States, China and Saudi Arabia. Vietnam’s plastic material imports from the United States reached US$ 150,595,000 in 2008, rising two-fold over 2005 and accounting for about 5 percent of the country’s total plastic material imports. Vietnam’s imports of plastic materials from the United States increased steadily from US$ 77,666,000 in 2005 to US$ 86,761,000 in 2006, reaching US$ 143,262,000 in 2007.
In addition to importing 70 percent – 80 percent of its plastic materials inputs per year, Vietnam imports virtually all the equipment and machinery needed for the manufacture of plastic products. Like plastic materials, the majority of the country’s plastic manufacturing equipment and machines are imported from a few Asian countries including Taiwan, China, Korea, and Japan. In addition, the country imports a fair amount of plastic production equipment and machinery from Germany and Italy. Imports of plastic production equipment and machinery from the United States were estimated at 2.5 percent of Vietnam’s total imports of equipment and machinery in 2008.
By Triet Huynh
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