Plastic is one of the typical materials used in the production of everyday consumer goods and a crucial input for many industries. As science and technology have advanced, plastic products have become more varied and have replaced many conventional materials like iron and steel, glass, etc. As a result, the plastics business is growing at an exponential rate, eventually becoming one of the most significant economic sectors.
- A description of the plastics sector
The plastic industry is still young globally and in Vietnam compared to other well-established industries like mechanics, electrical-electronics, chemicals, textiles, etc. Still, there has been significant growth in the sector in recent years. With an annual growth rate of 16% to 18%, the plastics industry in Vietnam is one of the sectors seeing the strongest growth between 2010 and 2020. (only after telecommunications and textiles). Some specific plastic goods within the sector saw growth rates of nearly 100% annually.
The plastic industry in Vietnam is regarded as a dynamic sector due to its quick rate of development. There are a number of explanations for why plastic products are expanding at such a rapid rate. First off, there is a sizable and lucrative market for products made of plastic. Products made of plastic are employed in all aspects of life (e.g. for packaging materials, construction materials, production of household appliances, etc.). Second, compared to the rest of the globe, Vietnam’s plastic sector is still in its infancy.
- The business situation of enterprises
Although one of Vietnam’s more recent businesses, the plastics sector is growing extremely quickly. As of now, there are more than 4,000 businesses working in this sector, the majority of which are private businesses centered mostly in the South of Viet Nam (which houses more than 80% of the nation’s plastic businesses). This is where several industrial parks with a focus on the processing of plastic packaging items are located. The majority of plastics businesses are SMEs. Which, foreign nations provide more than 90% of Vietnamese plastic businesses. None of them has been successful in creating their own brand.
Vietnamese plastic businesses in general are not very competitive due to their tiny production volumes and poor technological capabilities. Vietnamese plastic businesses currently rely primarily on Chinese technology. More than 40% of the production lines, machinery, and equipment imports are from China. To make engineering plastic products, several plastics businesses have recently invested in more cutting-edge technology from Korea and Japan, or German technology to produce building plastic products.
3. Structure of plastic products and materials
The plastic products that Vietnam has more advantages to produce are plastic packaging, consumer products, construction products, and a number of high-tech plastic products such as oil pipes, plastic components for automobiles, machinery, and computer manufacturing. But in general, Vietnamese plastic products are not diverse in terms of designs and types and there are not many products with high added value.
Regarding the structure of plastic products, they can be divided into the following main product groups: packaging plastic, household plastic, construction plastic, and engineering plastic.
Table 1: Main groups of plastic products produced by Vietnam
| Product | Proportion | TechnologyMain | Original main material? | Product primarily | Main customers |
| Packaging plastic | 39% | Extrusion blown technology | PE, PP, PET | Thin film packaging, plastic bags, PET bottles | Food and beverage processing enterprises and retail and supermarket systems |
| Household plastic | 32% | Press-molding technology | PP, PS, ABS | Household items | Consumers |
| Construction plastic | 14% | Pressing and Extrusion Technology | PE, PVC | Construction plastic pipe, building material plastic | Real estate and construction enterprises, Consumers |
| Engineering plastic | 9% | Injection molding technology | PVC, PP, PU | Types of accessories | Electronics, electricity, automobile, and motorcycle enterprises |
Source: Compilation of VPAS. reports
Primary plastic materials are made from petroleum, coal, and natural gas after the plasticization process. Plastic products can be formed from primary plastic materials or recycled plastic materials. Currently, Vietnam’s plastic industry is only self-sufficient in about 15-35% of raw materials depending on the type of products. The rest are imported from China, Korea, Japan, and the ASEAN region.
The reason that raw materials for the plastic industry in Vietnam are mainly imported is that the investment in the production of plastic materials often requires a lot of capital, including both initial investment capital and working capital during the operation. While the domestic demand for primary plastic materials grows by over 10%/year, the growth rate of supply is less than 3%/year.
In recent years, Vietnam has developed large petrochemical projects to provide raw materials for the plastic industry such as Binh Son, Nghi Son refinery and petrochemical projects, Phu My plastic and chemical project, TPC, Hung Nghiep Formosa, etc. However, primary plastic materials still only meet about 18% of the domestic demand.
4. Foreign investment in the plastic industry
Compared with many other industries, Viet Nam’s plastic industry is very potential for foreign investors. In the past years, Viet Nam’s plastic industry has witnessed a large wave of investment shifting from China to Vietnam. There are many reasons for this shift including cheaper labor costs compared to China, and some new Chinese policies prohibiting the import of waste plastics affecting the plastic recycling activities of China’s enterprises. Chinese plastic products are subject to anti-dumping duties in some markets, including Europe.
In addition, Vietnam has signed many free trade agreements with many major partners, creating more opportunities for investment and export, and attracting more foreign investors into Viet Nam’s plastic industry. Especially, investors from ASEAN (Thailand, Indonesia), Korea, and Japan have invested and bought shares in Viet Nam’s big plastic company. Currently, the number of domestic plastic enterprises accounts for about 85%, the remaining 15% are enterprises with foreign capital.
The participation of foreign investors in Vietnam’s market has significantly changed the face of this industry. On the one hand, the participation of foreign investors has made the investment market in this field more exciting, attracting capital and technology from abroad to help modernize the domestic plastic industry. On the other hand, 100% of domestic plastic enterprises will have to compete with very strong foreign plastic enterprises, leading to the situation that many Vietnamese plastic enterprises have to be sold to foreign countries, or exit from the market.
5. Import and export turnover of Vietnam’s plastic industry
For many years, the plastic industry has always been in a state of trade deficit, with export turnover much lower than import turnover. The trade deficit has increased from 7.3 billion USD in 2015 to 14.6 billion USD in 2020. There are many reasons for the trade deficit in the plastic industry. Firstly, currently, the supply of domestic plastic materials can only meet about 20% of the market demand, the remaining 80% of the material demand in Vietnam must be imported from abroad. Secondly, a large part of imported plastic materials is used to produce products that are input from other industries such as electronics, automobiles – motorcycles, construction, etc. but when exported, the value of these plastic components is not included in the export turnover of the plastic industry. Thirdly, the main products of the plastic industry are packaging products, household items, and plastic pipes used for construction, which mainly serve the domestic market. The export of these products is negligible.
Table 2: Vietnam’s plastic export and import turnover over the years
Unit: Billion USD
| 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | |
| Import | 9.9 | 10.9 | 13.3 | 15.3 | 15.5 | 19.6 |
| Export | 2.6 | 2.8 | 3.3 | 4.2 | 4.7 | 5 |
| Deficit | 7.3 | 8.1 | 10.0 | 11.1 | 10.8 | 14.6 |
Source: Compiled from ITC Trademap
+ Vietnam’s plastic import turnover
Vietnam’s plastic import turnover has nearly tripled from $5.4 billion in 2010 to 19.6 billion in 2020. The average import growth rate of the plastic industry in the period 2010-2019 is about 13 %.
In the structure of plastic imports in recent years, the import of plastic materials has accounted for more than half of the total import turnover of the plastic industry.
Table 3: Plastic import structure and value in the period 2015-2020
| Year | Material | Product | ||
| Value(Billion USD) | Proportion(%) | Value(Billion USD) | Proportion(%) | |
| 2015 | 6.0 | 60% | 4.0 | 40% |
| 2016 | 6.3 | 59% | 4.4 | 41% |
| 2017 | 7.3 | 58% | 5.4 | 42% |
| 2018 | 9.1 | sixty one% | 5.9 | 39% |
| 2019 | 9.0 | 58% | 6.5 | 42% |
| 2020 | 11.6 | 59% | 7.9 | 41% |
source: General Department of Customs
In 2020, the import turnover of plastic materials was about 11.6 billion USD, accounting for 59% of the total plastic import turnover. In, imported primary plastic materials accounted for about 98% and plastic wastes accounted for 2%. The highest volumes of imported primary plastic materials are PP (HS 3901), PET (HS 3907), and PP (HS 3902).
For finished plastic products, the highest volumes of imported products in 2020 are plastic sheets, bars, films, and foils (semi-finished products – HS codes 3919, 3920, 3921), accounting for half of the total imported finished plastic products, the rest are packaging plastics (HS 3923), kitchen plastics (HS 3924), construction plastics (HS 3925) and some other finished plastics (HS 3926).
+ Vietnam’s plastic export turnover
Although the export value of Vietnam’s plastic products is not high compared to other key export products such as textiles, footwear, furniture, etc., its average export growth rate from 2010 to 2020 reached 16%. It is higher than the average import growth rate in the same period which reached 13%. In 2010, the total export turnover of plastic products was less than 1.4 billion USD, but it reached nearly 5 billion USD in 2020.
Table 4: Vietnam’s plastic exports over the years
| Five | Ingredient | Product | ||
| Value(billion USD) | Percentage % | Value(billion USD) | Proportion% | |
| 2015 | 0.40 | 18% | 1.80 | 82% |
| 2016 | 0.36 | 16% | 1.86 | 84% |
| 2017 | 0.51 | 17% | 2.50 | 83% |
| 2018 | 0.97 | 24% | 3.04 | 76% |
| 2019 | 1.27 | 27% | 3.44 | seventy three% |
| 2020 | 1.35 | 27% | 3.65 | seventy three% |
Source: Compiled from ITC Trade map
In terms of export structure, Vietnam exports main products (finished products and semi-finished products). Before 2018, the proportion of exported materials accounted for less than 20% of Vietnam’s total plastic exports. But starting in 2018, the export proportion of plastic materials has increased and it accounted for over 20%, 24%, and 27% in 2018, 2019, and 2020 respectively.