Vietnam Plastic Industry Page 6 of 41 Furthermore, the plastic industry is facing difficulty, especially firms using PP as raw material for the production.. - Due to economic crisis duri
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VIETNAM PLASTIC INDUSTRY
Prepared by Consulting and Research Company for Technology Transfer and Investment
August 2013
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TABLE OF CONTENTS
LIST OF TABLES 4
1 INTRODUCTION 5
2 CURRENT SITUATION OF VIETNAM PLASTIC INDUSTRY 7
2.1 Arrangement and distribution of Vietnamese plastic enterprises 7
2.2 Output 9
2.3 Market and Export capacity 10
2.4 Material sources 12
2.5 Machinery and technology 15
2.5.1 Machinery 15
2.5.2 Technology 17
2.6 Labor 18
2.7 Development orientation and policy for plastic industry to 2020 20
2.7.1 Development orientation 20
2.7.2 Gross output targets of plastic industry 20
2.7.3 Value added targets of plastic industry 21
2.7.4 Production targets of plastic products 21
2.7.5 Plastic industry products proportions targets 21
2.7.6 Plastic industry products export targets 21
2.7.7 Development master plan to 2020 22
2.7.8 PP import tax 22
3 SURVEY ABOUT PLASTIC PROCESSING TECHNOLOGIES IN VIETNAM 24
3.1 Introduction 24
3.1.1 Survey objectives 24
3.1.2 Survey objects 24
3.1.3 Survey tools 24
3.1.4 Survey process 25
3.2 The survey’s main results 25
3.2.1 Type of ownership 26
3.2.2 Activity area 26
3.2.3 Type of business 27
3.2.4 Activity scope 27
3.2.5 Staff 28
3.2.6 Turnover 29
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3.2.7 Export Capacity 30
3.2.8 Current situation of processing technologies 31
3.2.9 Plans for purchasing machine, equipment in next two years 33
4 CONCLUSION 35
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LIST OF TABLES
Table 1 Distribution of companies by geographical area 7
Table 2 Distribution of companies by product category 8
Table 3 Plastic output and consumption index 9
Table 4 Output of plastic products by main categories 9
Table 5 Export turnover during the period 2006 – 2012 10
Table 6 Export turnover by region 2008-2012 (thousand USD) 11
Table 7 Export turnover by country 2008-2012 (thousand USD) 12
Table 8 Quantity and turnover of imported material in 2008-2012 13
Table 9 Production capacities of some big domestic companies 13
Table 10 Plastic materials imported into Vietnam 14
Table 11 Plastic machinery market size 15
Table 12 Rubber and plastic machinery (HS 8477) World exports to Vietnam 16
Table 13 Imported machines for plastic manufacturing 18
Table 14 Labor of plastic industry 19
Table 15 Gross output targets of plastic industry 20
Table 16 Added value targets of plastic industry 21
Table 17 Production targets of plastic products 21
Table 18 Plastic industry products proportions targets (unit: %) 21
Table 19 Plastic industry products export targets 21
Table 20 Development master plan in 2011 -2015 period 22
Table 21 Development master plan in 2016 -2020 period 22
Table 22 PP import tax 22
Table 23 Distribution of surveyed enterprises by type of ownership 26
Table 24 Distribution of surveyed enterprises by region 26
Table 25 Surveyed companies by form of ownership 27
Table 26 Survey companies by type of plastic products manufactured 28
Table 27 Surveyed companies by employees categories and form of ownership 29
Table 28 Survey companies by turnover in the last three years (2010, 2011, 2012) 30
Table 29 The ratio of exported product on total year production 30
Table 30 Ratio of plastic technologies being used in surveyed companies 31
Table 31 Surveyed companies by machine exporters 31
Table 32 Surveyed companies by turnover category and new machines purchased 32
Table 33 Surveyed companies by form of ownership and new machines purchased 33
Table 34 Plans for purchasing machine, equipment in the next two years 33
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1 INTRODUCTION
The plastic industry commenced almost half a century ago in Vietnam; however, the production remained limited in compared to that of other countries in the region like Malaysia, Singapore, Thailand and China
In the 1990’s the output was on average equal to 380,000 tons and consumption hovered around 3.8 kg/person With the economic reforms of the mid-90’s, plastic production boomed growing 20-25% each year while diversifying in quality and range One of main reasons attributed to the plastic industry growth is a still low starting point, an average consumption per capita lower than
of the region and the world This is expressed by an average growth of over 20% in value and over 18.75% in production from 2006 until now Plastic industry size is accounting for 4.48% of local whole industry and playing a role of an essential supplementary industry that needs
development in state economy plans Vietnam plastic industry is one of ten industries that are favored by the government for development priority due to its excellent and stable growth as above-mentioned, performing quite strong in exports activities and having good competitiveness over other regional countries
Vietnam’s production output of plastics per capita kept on growing strongly, from 23.2 kg of plastic per person in 2005 to 42 kg per capita in 2012 At present, most of household plastics sold in supermarkets are local products and account for around 20% of the industry's total output Another product category that has achieved strong growth and made up the largest production ratio (around 40%) is plastic packaging, nearly all of which is also locally made Meanwhile, state owned enterprises typically produce also technical and construction items In basic sectors such as daily-use household plastic products, domestic enterprises, especially small and medium sized ones (SMEs), are the major producers
Competition in the Vietnamese market is currently quite vigorous Many companies are in the hands of Chinese-Vietnamese who procure supplies from family contacts living around the world The Vietnamese government is encouraging their merger to cope with the increased competition after WTO entry
Vietnamese plastic products have been sold in 151 countries all over the world such as Japan, USA, The Netherlands, Germany, Cambodia, UK, Indonesia, and Malaysia, and so on Last year, Vietnam’s plastic export revenue reached nearly USD 2 billion, making an increase of 25% year
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Furthermore, the plastic industry is facing difficulty, especially firms using PP as raw material for the production Because plastics enterprises will bear import duty for plastic material
Polypropylene (PP) from 2014, when the import tariff shall be increased from the current level
of 0% to 1% in 2014, up to 2% in 2015 and 3% from 2016 onwards1
Other challenges include the high ratio of unskilled workers, at 70-80% of the workforce and
of SMEs which account for 80% of the total and lack capital to improve production
1 Circular No.107/2013/TT-BTC of August 12, 2013, amending preferential import tax rates applicable to some commodities of headings 2707, 2902 and 3902 in the preferential import tariff
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2 CURRENT SITUATION OF VIETNAM PLASTIC INDUSTRY
2.1 Arrangement and distribution of Vietnamese plastic enterprises
The number of plastic corporations in Vietnam reduced sharply from 2,700 in 2006 to 1,400 in
2012 There are some main reasons led to this situation:
- The development of the plastic industry led to strong investment in large enterprises Small businesses do not have enough capacity so have to cooperate/merge together to be strong enough to compete with big business
- Due to economic crisis during last time also led to the situation that small businesses face with difficulties in accessing capital for development investment
- The cost of production (including factors: price of input materials - technology, production costs) rise is also another cause of the reducing of the number of plastic firms Due to the above reasons, in plastic industry there existed a conflict between a large numbers of companies with real capacity Among plastic firms, only 6% are state-owned, but they
represent about 25% of the total capital invested in the industry State-owned companies tend to
be larger, employing more workers and having greater total investments than their small or medium sized private competitors The rest are foreign invested enterprises, which account for about 15% total number of plastic firms but having 40% of overall investments As for private enterprise, some business having right investment for technology and the skills of the
workforce have a noticeable development, but the number of these firms is very limited In fact, private firms account for over 70% total number of plastic firms but having only 35% of overall investments
According to VPA report 2012 and Statistical Yearbook of Vietnam 2012, there are 1,400 firms operating in plastic industry Most enterprises are located in the South of Vietnam HCMC and the southern provinces contribute 83% to the total plastics production Hanoi and the northern provinces account for 13% and the central region covers the remaining 4%
Table 1 Distribution of companies by geographical area
Source: VPA, GSO
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In the present structure of the plastics industry, packaging firms account for the largest
proportion (39%) and they also represent the largest export ratio (accounting for 66%)
Consumer group accounted for 22%, this group narrowed most compared to 2007 period
Construction group had strong growth in the years 2007 - 2008 due to huge demand for
construction at that time; however, this segment is facing many difficulties due to the freezing of the real estate market in the past few years Technical plastics group accounted for 19%
Table 2 Distribution of companies by product category
produces such as pressure pipes, cover of TV
Source: VPA report
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Consumption index
Note: * Estimated
Source: Ministry of Industry and Trade
In recent years, the output of Vietnam plastic industry has continued to grow, although at a slower pace, given the difficulties brought about by rising prices of petrol and materials
Table 4 Output of plastic products by main categories
Volume (tons)
Rate (%)
Volume (tons)
Rate (%)
Volume (tons)
Rate (%)
Volume (tons)
Rate (%)
Volume (tons)
Rate (%)
Packaging 714,400 38% 917,600 40% 1,328,000 41,5% 1,482,000 39% 1,627,400 39,5% 1,800,000 40% Consumer 488,800 26% 619,380 27% 896,000 28% 1,140,000 30,% 1,277,200 31% 1,440,000 32%
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Construction 413,600 22% 481,740 21% 576,000 18% 646,000 17% 618,000 15% 652,500 14.5% Technical 150,400 8% 160,580 7% 272,000 8,5% 342,000 9% 370,800 9% 382,500 8.5% Others 112,800 6% 114,700 5% 128,000 4% 190,000 5% 226,600 5,5% 225,000 5% Total 1,880,000 100% 2,294,000 100% 3,200,000 100% 3,800,000 100% 4.120,000 100% 4,500,000 100%
Note: * Estimated
Source: Ministry of Industry and Trade and GSO
Of the total plastic output in 2012, plastic packaging accounts for 40% while plastic consumer, construction materials, and technical account for 32%, 15% and 9% respectively
2.3 Market and Export capacity
Vietnam plastic exports has enjoyed a noticable growth since 2007 2010 was a milestone of
Vietnam plastic exports with the turnover of over USD 1.2 billion for the first time Since then, export revenue kept on strongly growing to nearly USD 2 billion in 2012 This is considerable growth by Vietnam plastic industry, showing a strong recovery of plastic industry after the 2008 financial crisis, a positive sign of development for Vietnam plastic industry.
Table 5 Export turnover during the period 2006 – 2012
Export turnover (million USD) 478 750 922 968 1,268 1,599 1,995
Source: Ministry of Industry and Trade, Vietnam Custom
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Vietnamese plastic products have been sold in 151 countries all over the world such as Japan, USA, The Netherlands, Germany, Cambodia, UK, Indonesia, and Malaysia, and so on During last five years, Pacific Asia has still been the biggest market of Vietnam (nearly 60% in 2012) Europe market kept a stable ratio (around 28%)
Table 6 Export turnover by region 2008-2012 (thousand USD)
2008 2009 2010 2011 2012 Markets
Ratio
(%)
Export value
Ratio
(%)
Export value
Ratio
(%)
Export value
Source: Ministry of Industry and Trade
Vietnam plastic export turnover to Italy is quite stable (around 20-30 million USD) The export turnover to China has reduced significantly (from 247 million USD in 2008 to 26 million USD in
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2012) Japan is still top-three importer for Vietnam plastic products However, the export
turnover has decreased sharply from 321 million USD to 143 million USD This situation is the
same with Thailand The total turnover of Vietnam plastic products to Thailand declined from
137 million USD to 27 million USD
Table 7 Export turnover by country 2008-2012 (thousand USD)
United States of America 161,734 136,356 114,605 137,777
150,357
Japan
321,429
250,397
194,194
143,535
143,688
Netherlands
98,942
86,463
66,591
47,200
63,838
Germany
140,073
105,769
71,588
55,970
35,682
France
70,002
42,536
32,941
30,248
32,610
Thailand
137,903
79,457
46,139
30,061
27,156
Italy
22,693
28,618
23,728
32,751
27,079
China
247,608
97,514
55,584
34,670
26,010
Malaysia
58,536
48,139
34,144
23,997
24,719
Indonesia
140,836
84,710
44,525
19,259
13,191
United Kingdom
73,000
85,914
53,990
41,993
6,417
Source: Ministry of Industry and Trade
2.4 Material sources
Scarcity of locally produced raw materials poses itself as one of the main barriers to the stable
development of the Vietnamese plastic industry in the long term, causing a heavy dependency on
imports As reported, domestic supply of raw materials can meet only 15-20% of the country’s
demand (see more data at table 8) Therefore to feed this fast-growing sector, Vietnam has to
import a huge quantity of raw materials and auxiliary chemicals In 2012, import value of plastic
materials reached USD 4 billion, twice as much as its export turnover Because local
petro-chemical capacities could not meet fully domestic enterprises demand, domestic raw materials
can meet only 15-20% percent of the country’s demand and in fact 80% - 85% of raw materials
should be imported from abroad
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Table 8 Quantity and turnover of imported material in 2008-2012
Source: Ministry of Industry and Trade
Table 9 Production capacities of some big domestic companies
Chemicals Group
150.000 tons/ year
Hung Nghiep Co., Ltd
150.000 tons/ year 30% for export
At present, Vietnam has imported over 30 categories of plastic materials served for production,
in which PE and PP are the most imported ones In 2012, PE was imported from 25 countries in
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the world with total imported quantity 544 thousand tons, worth 775 million USD In which, Saudi Arabia is the biggest PE exporter to Vietnam, counted 33% of total PE imported PP is the second largest imported material in plastic industry with 472 thousand tons, worth 701 million USD Saudi Arabia still kept the position of top PE exporter to Vietnam, counted 22% of total
Imported quantity
PS 80,710 146,470 77,040 103,688 90,948 150,810 102,526 202,060 108,027 195,987 ABS 48,178 96,997 63,527 100,415 69,154 144,359 78,358 186,994 87,041 189,670 EVA 45,495 90,909 48,746 73,576 56,703 112,489 57,097 140,889 66,338 131,816 Acrylic 32,732 59,483 40,369 71,343 55,673 113,730 53,263 128,792 60,260 138,397 Polyether 32,028 74,180 42,998 86,312 52,068 126,506 61,332 193,912 58,580 174,342
PC 18,282 51,914 19,875 44,364 30,050 84,833 35,440 111,249 40,088 111,493
PA 10,947 34,927 15,930 40,661 20,603 69,544 42,796 161,783 39,789 130,691
PU 37,381 112,414 38,748 108,608 49,233 147,146 47,694 159,441 34,275 116,066 Alkyd 25,951 45,627 30,294 45,376 32,643 52,448 32,277 61,166 33,918 66,614 EPS 28,011 44,007 36,467 44,256 46,863 69,838 40,656 67,698 30,516 48,064 Lactic-
acid PP 5,040 10,505 10,337 14,308 10,854 19,277 8,845 22,014 27,441 46,872 Amino 5,453 9,115 5,630 9,597 5,585 9,962 8,061 18,782 13,953 30,430 Silicone 6,457 30,013 5,567 27,128 8,255 42,454 9,545 50,984 13,653 75,768 Epoxide 12,679 32,248 11,677 25,163 13,395 37,753 14,873 52,873 12,727 48,980 Xenlulo
& DX 9,183 29,448 9,957 31,404 12,292 40,469 11,753 52,990 12,437 49,302 Styrene-
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Cumaron
– indene 4,205 7,009 5,009 6,678 5,414 8,143 5,770 11,063 6,110 12,300
PMMA 6,945 16,369 7,601 16,801 5,671 15,827 6,505 19,879 3,821 10,973 Natural
Polymer 1,452 5,708 1,702 7,216 1,395 10,176 1,893 9,865 1,614 9,060 Ion-
Source: Ministry of Industry and Trade/ Vietnam Customs
2.5 Machinery and technology
2.5.1 Machinery
Most of the capital equipment in the plastic industry is imported (from about 60 countries in the world) The majority of imported machinery is from Asia countries (including Taiwan, Japan,
China, South Korea) and Europe countries (Germany, Belgium, Italy and Austria) However,
more than half of imported machine are out-of-date equipment
The total market for plastic machinery in 2012 was approximately US$ 450 million, increasing
from US$ 148 million in 2005 (3 times)
Table 11 Plastic machinery market size
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During the period 2007-2012, China has kept this 1st position in rubber and plastic machinery
exporters to Vietnam (nearly 30% of total imported value) Top-five exporters to Vietnam in
2012 are China, Japan, Taiwan, Korean (Republic) and Italy (from rank 7th in 2007 to 5th in
2012) Total exported value of this five countries to Vietnam in 2012 counted nearly 90% total
imported value of Vietnam Notingly, Slovakia (Slovak Rep.) imported rubber and plastic
machinery to Vietnam boosted from rank 45th (588 USD) to top-ten exporter to Vietnam (3
million USD)
Table 12 Rubber and plastic machinery (HS 8477) World exports to Vietnam
Unit: Thousand USD
China 83,021.707 89,055.302 67,579.331 108,201.416 117,423.193 132,021.447 Japan 54,538.341 83,258.400 29,508.559 74,903.936 97,959.538 122,889.416 Taiwan 72,616.531 103,885.157 57,232.124 83,881.680 99,744.614 80,680.305 Korea (Republic) 71,063.725 24,229.344 18,796.870 37,723.784 38,982.265 57,500.157
Italy 5,349.275 16,754.280 2,604.884 12,030.714 23,615.516 11,002.750
Malaysia 5,030.842 6,736.048 4,184.939 2,095.831 10,204.797 10,904.165 Austria 1,879.746 1,249.930 8,609.250 3,176.779 3,907.120 7,291.144 Germany 13,628.807 21,898.348 30,570.240 12,247.070 10,492.372 6,408.460 Canada 2,916.139 1,951.390 2,641.266 8,527.574 1,457.170 3,342.216 Slovakia (Slovak
United States of
America 2,627.702 3,201.204 1,220.601 5,128.233 1,123.759 3,026.853 Thailand 5,849.430 4,499.194 1,043.339 1,850.304 3,741.649 2,497.148
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technology is still simple and concentrated in the major enterprises only Since 2005, many
plastic processors in Vietnam have invested considerable money in upgrading their
manufacturing equipment and machinery to improve their products in terms of quality and
design, thus being able to compete successfully in domestic and international markets For
instance, a few large firms are manufacturing high-quality and hi-tech plastic products by using advanced equipment and machines imported from Germany, Italy and Japan
In average (during the period 2007-2012), Vietnam imported 100 injection machines, over 500
injection blow molding machines and 200 extrusion machines per year Around 30% of imported machines are new machines and the rest (70%) are second-hand ones
Up to now, according to data from Ministry of Industry and Trade, there are about 10,000
injection machines, extrusion machines and injection blow molding machines, including nearly 6,000 injection molding machines, more than 3,000 blow molding machines and nearly 1,000
extrusion machines
Injection technology
This technology is used to make plastic components and parts for the electronics, electrical
power, motorbike and automobile industries Among 6,000 injection molding machines, 75% of them are the second hand used out-of-date technology (made from 2005) Around 1,000 injection molding machines of them are of new generation The total imported value of injection molding machines of Vietnam increased from 50 million USD in 2007 to 76 million USD in 2012
Some main brands are currently present in the Vietnam market:
Europe: Engel (Austria); Demag – Battenfeld – Boy- Krauss maffei, Arburg (Germany)
America: Husky (Canada)
Asia
Mitsubishi, Niigata, Toshiba, Kawaguchi, Sumitomo, Nissei, Kurabe (Japan)
Chen De, Chuan Tian, Hai Tian, Yue Hong, Jwell, Keewa, Dakelianshun (China)
LG, Dongshin, Woo Jin, Jinhwa (Korea)
Chuan Lihfa, Fu chu sin, Lien yu, Yanghing, Jonwai, Han Chang (Taiwan)
Injection blow molding technology
A large number of plastic product manufacturers in Vietnam are using injection blow molding
machines to produce plastic packaging products, including PET bottles and kegs The total
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imported value of blowing machines decreased from 26 million USD in 2007 to 14 million USD
in 2012
The main brands identified in Vietnam market include:
Europe: Sipa (Italy); Sidel (France)
America: Husky (Canada)
Asia: Nissei - Placo (Japan), Kaimei - Parker (Taiwan), Sinco (Thailand); Hongzhen (China)
Extrusion Technology
In Vietnam, this technology is used for making such products as water drainage PVC pipes, water supply PE pipes, aluminum-plastic pipes, optic cables, PVC doors, frames, roofing, and wall coverings This is a pellicle-blowing technology to make plastic packaging materials from pellicles This technology is used for blowing polyethylene (PE), polypropylene (PP) bags and PVC pellicles
The total imported value of extruders increased slightly from 40 million USD in 2007 to 46 million USD in 2012
The main brands include:
Europe: Amut SP (Italy); Battenfelf – Kraussmaffei (Germany); Cincinati (Austria)
America: PTI – Plastic technical International GmbH, SMS Plastic Technology, Tecnomatic (US)
Asia: Shin Kwang Engineering Co., (SK), Yarn Bang Electrical Machinery Co., ltd., SM Platek (Korea); Ka lien, Wuhan, Sen fa Machine Co., ltd (Taiwan); Koei Industrial Co., Ltd, Nissei, Sumittomo, Mitsubishi (Japan), Zhangjiagang (China)
Table 13 Imported machines for plastic manufacturing
Unit: Thousand USD
Imported machines 2007 2008 2009 2010 2011 2012
Injection-molding machines 50,036 55,384 40,203 66,250 68,155 76,060
Extruders 40,769 54,977 26,457 34,325 51,708 46,794
Blowing machines 26,016 10,197 12,983 15,360 16,474 14,091
Vacuum molding machines and
other thermoforming machines
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firms are facing with a scarcity in labor supply, especially skilled labor that are able to using new generation equipments In 2012, there are about 130,000 labors working in plastic
industry but that 70% of plastic industry workers were unskilled, low professional skill,
unable to operate modern equipments This percentage is somewhat higher than the combined average of unskilled workers in other industrial sectors such as textiles, footwear… Workers and engineers working in the plastic industry in Vietnam are trained from different mechanical engineering branches of universities and vocational school, there are no training institutions for this sector2
Table 14 Labor of plastic industry
Source: Ministry of Industry and Trade
According to Human resource development planning of Hochiminh city (HCMC), there are four major economic sectors for the period 2013-2015, orientation for the period 2020 – 2025: electronics, information technology, food processing, chemicals – rubber – plastic and
mechanics HCMC needs 45,900 jobs In which chemicals – rubber – plastic sector needs
10,800 employees
According to Ministry of Trade and Industry, the development orientation in the future for
labor of plastic industry:
Along with the focus training in the professional schools, plastic firms need to spend rational cost for retraining staff and technical employees, abroad if necessary It is
essential to effectively use advanced equipment, technology for high product quality and low production costs
Develop comprehensive strategic programs and plans in training managers and skilled employees The training must be conducted in a wide scope to meet the immediate
requirements, but also has plans to train for higher-skilled workers for the development
in the future
2 In fact, recently, there are some training centers, colleges provide training courses relating: plastic – chemical – petrochemical but it is very few, and their number of students/trainees are small
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Capacity building for universities, colleges and vocational training to train good
managers and skilled workers, meeting the growing needs for labor force in plastic industry
Develop training centers, vocational training for plastic industry These centers operate with the support of enterprises and organizations at home and abroad These centers are responsible for coordinating with professional units to formulate long term, short term, and thematic training programs to update knowledge and disseminate the latest domestic and international information for trainees
2.7 Development orientation and policy for plastic industry to 2020
Production and consumption of plastic enterprises in the industry next time will be affected significantly from tightening monetary policy, decreasing public investment spending, as well
as the grim situation of the construction industry and real estate Under this curriculum, on 17 June 2011, the Ministry of Industry and Trade issued Decision no 2992/QD-BCT approving the planning on development of Vietnam's plastic branch until 2020, with orientation to 2025 According to this plan, Plastics’ export revenue is expected to reach US $2.15 billion and US
$4.3 billion by 2015 and 2020, respectively; the growth rate is expected approximately
17.56% per year in the period 2011-2015, and, gradually reducing plastic packaging products and plastic consumer, increasing proportion of construction and technical plastics
2.7.1 Development orientation
Development of plastic industry shall be oriented to modernization, intensifying
automation, gradually eliminating old equipment and technologies to substitute with world state-of-the-art equipment, new materials usage to ensure quality, safety,
hygiene norms, meeting environmental criteria requested by Vietnam and the world Plastic industry investment should go straight into modern technologies to create high quality products with low costs that could compete on domestic and world markets, ensuring ecological environment
To mobilize all resources at home and abroad to focus on investment in plants
producing materials, semi-finished products, chemicals, additives for plastic industry Besides, to encourage investment in mold manufacturing, parts and equipment for the plastic industry; to encourage the development of waste and scrap plastic processing industry
2.7.2 Gross output targets of plastic industry
Table 15 Gross output targets of plastic industry