OPPORTUNITY FOR PLASTIC, PRINTING AND PACKAGING INDUSTRIES DEVELOPMENT

The plastic, printing and packaging industries are assessed to have rich potential for businesses to further tap into.

Growing competitive pressures

At the workshop on “Plastic - Printing - Packaging Industries in Vietnam: Great opportunity from Industry 4.0”, Dr. Nguyen Minh Phong said the plastic industry has grown 15 - 20% annually in the past 10 years. However, as most businesses in these industries are still small and medium in scale, they are facing increasing competition with foreign rivals. In general, domestic companies have to compete with foreign competitors while they have to depend on imported inputs and stand on the downside in the race for advanced technology and machinery.

Dr. Phong said, companies from Thailand, South Korea and Japan occupy up to 90% of the plastic packaging market. They hold a lot of advantages in technology, input prices, product outputs and export markets. This places more competitive pressure on domestic enterprises, particularly for the most profitable export pie of plastic packaging industry, the U.S. and Japanese markets. Currently, the U.S. and Japan respectively account for 60% and 15% of Vietnam's plastic packaging exports. In the coming time, the Japanese market may increase packaging plastic imports from Vietnam instead of China. And, this may fall to foreign-invested companies.

Besides, Vietnamese companies confront input price and source pressures. According to the Vietnam Plastics Association (VPA), the country’s plastic industry needs an average of 2 - 2.5 million tons of raw materials each year but 75 - 80% of them come from imports. The carton packaging industry faced material price hikes in 2014 (rising by 60 - 80%) while output price climbed only 20 - 40%. The area for input materials is shrinking while paper import tax picks up 5 - 17%.

Running after market demand is a pressure on domestic enterprises as well. For example, instead of using discarded packages, consumers prefer buying products carried in high-quality multi-utility packages to preserve food products and only a few Vietnamese companies can make these products. For example, milk packaging is still the only realm of foreign businesses. Besides, Vietnamese companies are not on par with foreigners in producing non-permeable PE paper packages or zipped bags.

This forces domestic packaging and plastic printing companies to change and invest more to compete with foreign enterprises.

Green technology and opportunity from FTAs

In the boom of Fourth Industrial Revolution, in the next five years, the plastic and packaging industry will grow both in size and technology. In particular, the green packaging technology which saves non-renewable resources and reduces emissions will become more popular. This trend will be driven by the growth model changing from grey to green, sustainable development, consumer protection and living environment. These are great opportunities for Vietnamese plastic, printing and packaging businesses.

On impacts from the domestic economy, Dr. Tran Dinh Thien, former Director of the Vietnam Institute of Economics, emphasized that the Government should step up institutional reform and create new driving force for the whole economy in general and the plastic - printing - packaging industry in particular.

He added that Vietnam has occupied many advantages in this industry and witnessed strong participation of foreign suppliers of machinery, equipment and inputs for plastic, packaging and printing industries. This is both an opportunity and a challenge for domestic production that requires businesses and related industries to be proactive in their development and competition strategies.

Besides, according to experts, Vietnam’s signing of many free trade agreements (FTAs) has brought many opportunities for Vietnamese businesses. Many partners have shifted their orders from China to Vietnam to have lower production costs and softer export duties to South Korea, Japan and Europe (EU). Plastic import demand remains high in the EU and Japan, and customers there increasingly prefer Vietnamese plastic products. The Vietnam - Europe Free Trade Agreement (EVFTA) will open up opportunities for plastic businesses to boost exports to European markets, especially plastic packages. Furthermore, the domestic market has also added momentum for plastic packaging development due to higher per capita plastic consumption in Vietnam.

However, to compete in the domestic and international markets and develop export-driven products, enterprises need to utilize local market potential, look for new markets, diversify models and improve quality.

Source: VCCI