Market Overview
The plastics industry has been one of the Vietnam's fastest growing industries over the past five years with annual growth rates of between 27 to 30 percent (just after the telecom industry). Per capita plastic consumption rose from 4kg in 1995 to nearly 12kg in 2000, and this trend seems continue. It is estimated that by 2005, plastic consumption per capita will increase to 20kg and to over 50kg by 2010.

Vietnam's plastics industry has reached output over one million tons, and in basic sectors such as daily-use household plastic products, domestic producers are dominant players in the market. At present, over 90% of household plastics sold in supermarkets are local products, and account for 30% of the industry's total output. Another product category that has achieved strong growth and made up the largest production ratio (40%) is plastic packaging. Almost all the packaging for food, foodstuffs, beverages, mineral water, seafood and chemicals are produced locally. The plastics industry has recently recorded high annual growth rate of around 35%, but must import 90% of its materials and currently produces few hi-tech plastic products. Because raw materials, chemicals and additives represent between 60-70 per cent of the production cost, the reliance on imports leaves the industry with only a marginal added value.

The development strategy of Vietnam's plastics industry to 2010 has stated that the industry will need investment of US$ 3 billion to achieve industry goals. The plan outlines an integrated plastics industry where raw materials would be almost exclusively supplied by in-country resources and product is both used for domestic consumption and export. By 2005, 30% of the industry's demand on materials should be supplied domestically, lessening its heavy dependence on imports. The industry will focus on replacing and upgrading machinery and equipment for raw material production and hi-tech products such as construction materials, parts for the auto, motorcycle, and refrigeration equipment industries...

Opportunities
Unlike most industries in Vietnam, the plastics industry is dominated by private (mostly SMEs) companies, which are also the primary purchasers of equipment. Some of the top private plastics companies are looking for markets outside. They have invested in modern machinery, equipment to be competitive. Since almost high-tech machinery and equipment are imported, those investments have brought potential opportunities for Canadian equipment suppliers, especially those who provide technology and equipment for manufacturing packaging, construction materials and automotive parts.

As far as the development plans is realized (2010 as expected), Vietnam is still heavily dependent on raw material imports, including polyethylene (PE), polypropylene (PP),polyvinyl chloride (PVC) and polystyrene (PS). This sector also represents business opportunities for Canadian exporters and/or even investors.

Market Access Considerations
Southern provinces have contributed 75 per cent of the total plastics production. Ha Noi and northern provinces account for 20 per cent and the central region produces the remaining five per cent. In the industry, State owned enterprises accounting for 6 per cent, the private sector 72 per cent and the foreign invested sector, 22 per cent. However, the State sector represents 20 per cent of the total capital invested, the private sector 45 per cent and the foreign invested sector, 35 per cent.

The Vietnam Saigon Plastics Association (VSPA), along with Vietnam Plastics Corporation (Vinaplast) has played an active role in representing local producers, and has been assigned to carry out several important programs in the industry such as the program to produce over 2 million plastic houses for low income families in the Mekong Delta and islands of Vietnam or the project to produce high quality B-oriented polypropylene (BOPP). The information about the Plastics Association, its members and programs can be found on-line at www.hcmste.gov.vn/vietplas.

With larger presence of the private sector, many of them are SMEs, the market procurement practices are considered more transparent than those in other industries. Nevertheless, conducting business in the plastics industry still requires a local partner who could provide updated information on new investments and legal issues. A good local partner would clearly help with marketing plans and reduce sales risks.

Competition
Currently there are 3 joint ventures, the only 3 raw materials producers exist in the country. LG Vina produces 30,000 tons of DOP per year. The other two joint ventures produce PVC, Thai Vina Plastic Co. (TPC) and Phu My Plastic and Chemicals, which begins production this year, should be able to supply nearly 200,000 tons of PVC resin annually.

Materials are mainly imported from other Asian countries i.e Korea, Thailand, Malaysia, Taiwan. Higher quality materials are imported from EU countries.

The major exporters to Vietnam in the plastics machinery industry are Korea, Taiwan, and China. Besides, Germany and Japan have good reputation in supplying high quality equipment to plastics manufacturers.