After many times of purchasing shares of Binh Minh Plastics Joint Stock Company (BMP), Thailand’s Siam Cement Group (SCG) recently announced that it raised the ownership at BMP to 51.10 percent. As having the ambition of building value chain in Vietnam plastic industry, SCG currently also possesses stake in many other companies in Vietnam’s plastic industry such as Chemteck Co (production of polyethylene XLPE TPC with 100 percent stake); Viet-Thai Plastchem (production of Plastics and Packaging TPC with 72.49 percent stake); TPC Vina Plastic and Chemicals (production of PVC-TPC with 70 percent stake).
Thai Siam Cement Group holds 51.10 percent of Binh Minh Plastics Company’s stake
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SCG’s investments in Vietnam over the last period have shown positive results. Typically was the investment in Tien Phong Plastic through The Nawaplastic Industries. With the capital withdrawal from Tien Phong Plastics, The Nawaplastic Industries earned about VND1.460 trillion, three times higher than the initial investment value. In addition, according to calculations, in more than five years of investment, The Nawaplastic Industries also received about VND173 billion of dividend in cash from Tien Phong Plastics.
Not only Thai investors, South Korean firms have also invested significantly in Vietnam’s plastics market. Dongwon Systems Corporations from South Korea bought nearly 15 million shares of Tan Tien plastic packaging Company to hold 93 percent of Tan Tien’s shares.
After Tan Tien, the South Korean corporation has also taken over Minh Viet Plastic Packaging.
Japanese firms such as MeiwaPax Group, Oji Holding Corporation and Sagasiki Vietnam have also seen great potentials in Vietnam’s plastics market and entered the market through acquiring domestic firms of Sapaco, United and Goldsun.
Vietnamese plastics industry has been increasingly attractive to foreign investors as the potential of the industry remains large while the production and competitiveness of Vietnamese plastics firms remain limited, experts said.
According to the Vietcombank Securities Company, the average plastic consumption in Vietnam is currently 41kg/person/year, lower than the Asian region’s average of 48kg/person/year and the global average of 70kg/person/year.
BMI Research also reported that the food industry will grow 10.9 percent in 2015-2019, and the bottled beverage sector will grow 17-25 percent. The industries’ high growth rates will help boost the rise of the plastics industry.
In the coming time when the Vietnam-EU Free Trade Agreement (VEFTA) is signed, the export market of plastic products to Europe will be strengthened.
According to the Vietnam Plastics Association, the demand for importing plastic products in EU market is assessed to be high, and Vietnamese businesses have good penetration ability.
Noticeably, in the EU market, Vietnam’s plastic products are not subject to anti-dumping tax like other Asian countries, which are suffering an average tax of 8-30 percent.
Despite such potential market, currently, domestic businesses have not mastered input materials. The Ho Chi Minh City Rubber Association forecasts that by 2020, materials to produce plastics will amount to five million tons and Vietnamese firms will have to import some 70-80 percent of the materials. The significant dependence on the import materials will cause the local firms difficult to utilize the VEFTA’s tax incentives because of regulations on origin of goods, which will reduce their competitiveness.
