VPA’s chairman Ho Duc Lam forecast that the country’s key export markets this year will remain Japan and the United States, both of which have high demand.
Vietnam now ranks sixth among the 10 largest plastics exporters to Japan
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The US’ continued anti-dumping duty imposed on PE bag imports from Vietnam has not held back domestic plastic producers as they have shifted to new markets, Lam noted.
Japan has become the top importer of Vietnamese plastic products, with import value rising by an annual average rate of 20-25%. The strong growth of exports to Japan has lessened the negative impacts of the US anti-dumping tariff, he added.
Vietnam now ranks sixth among the top 10 countries exporting plastic to Japan, which is one of the most difficult markets with many strict regulations on the quality of goods.
Meanwhile, every year, the average United States import turnover is more than US$50 billion for plastics and plastic products, accounting for 9.1% of the world’s total import of plastics, according to VPA.
Exporters of plastics have been urged to improve quality, design, and trade promotions to enter this market.
Lam recommended that Vietnamese plastic producers prepare long-term strategies and invest in market research to increase their penetration of the Japanese market.
In addition, the EU’s demand for plastics products imported from Vietnam is high, especially plastic pipes.
Vietnam’s plastic products are not subject to anti-dumping duties in the European markets like other Asian countries (the average tax rate is 8-30%).
Despite the high export prospects and strong development in recent years, experts said that the plastics industry should take measures to reduce the dependence on import raw materials. Each year, the industry needs an average of 4 million tons of raw materials, but only manages to produce about 900,000 tons, with the rest imported.
Experts have said that a shortage of raw materials will reduce the competitiveness of exporters.
Furthermore, because of regulations on the origin of goods, it is difficult to take advantage of tax incentives in free trade agreements.
Exporters also need to focus on environmentally friendly and safe products for sustainable growth.
The Vietnamese plastics industry earned $3 billion last year, posting a 17.3% increase over 2016, according to VPA.
In the domestic market, chairman Lam also forecast that the domestic plastics sector will continue to grow on the back of strongly growing domestic demand. Plastics consumption per capita is projected to increase to 45kg in 2020, mainly due to growth in the packaging and construction segments.
The Vietnamese plastics and packaging industry has been on the radar of investors from India, Thailand, South Korea, and Japan in recent years. These Asian investors prefer striking up deals with local partners, which has resulted in an increase of mergers and acquisitions in the field.
Lam noted that European and United States investors have also increased their presence on the domestic market. Unlike Asian investors, western companies prefer to develop their own facilities in Vietnam rather than acquire local assets.
The capital inflows into the field show no signs of slowing down. Indeed, the flow of foreign direct investment capital into Vietnam’s plastics and packaging sector has increased by 15% year-on-year, which is in line with the robust domestic demand in the market, Lam said.
