Plastics industry lacks raw materials

The domestic plastic industry faces a major challenge as domestic sources nationwide can only meet 10 per cent of the total demand for raw materials.

Every year, the industry has to import about 1.6-2 million tonnes of plastic raw material from foreign countries, equivalent to US$2.1 billion.

In over 11 month of this year, the industry imported more than 2 million tonnes of plastic raw material, costing nearly $2.5 billion.

This is the biggest challenge of the industry because raw materials account for 70-80 per cent of product prices, according to Vu Xuan Mung, deputy head of representative office of the Ministry of Industry and Trade in HCM City.

Mung said that this challenge had become tougher due to fluctuations in the exchange rate.

Due to this dependence, the prices of Vietnamese plastic products are always about 10-15 per cent higher than those in China and India.

Three domestic manufacturers are able to produce plastic raw materials, but costs are affected by oil prices.

To resolve the situation and maintain an annual growth rate of between 15-20 per cent, the industry is making effort to set up plants which are able to recycle plastic waste.

Domestic companies will be able to reduce prices and boost their export activities.

The Ministry of Industry and Trade has highlighted this solution in its economic plans as a key policy.

Waste plastic was in plentiful supply but we hadn’t taken advantage of it, because the country had no concentrated places to collect waste plastic. Also, waste plastic hadn’t been correctly treated, said Nguyen Khac Long, General Director of the Viet Nam Plastic Co.

Companies could save $600 million per year if 35-50 per cent of waste plastic were recycled, Long said.

Product prices would also fall 15 per cent if recycled plastic was used, he added.

With reduced prices, the industry would be able to boost exports to markets such as the US and Japan that demand that plastic products must be comprised of at least 10 per cent of recycled plastic.

The industry annually posted a 15-20 per cent growth rate in the last decade, providing large numbers of jobs.

About 2,200 manufacturers currently produce plastic products, with about 80 per cent of them based in HCM City.

VietNamNet/Viet Nam News

Tags: Vietnam plastics industry