VIETNAM: Plastics industry needs long-term strategy

Although the fledgling plastics industry has recorded remarkable growth over the recent years, it still faces many difficulties and it is essential to devise a long-term development strategy, experts have said.

This conclusion was drawn at a conference to discuss a draft plan for the development of the plastics industry until 2020 held in Ha Noi on Sunday (2 Jan. 2011).

The industry posted US$1 billion in export turnover last year, 21 per cent up against the previous year. It is expected that the sector will retain an annual growth rate of 18-20 per cent by 2020.

The industry currently exports products to 41 countries, including the US, the EU, Japan and the Philippines.

According to the Ministry of Industry and Trade (MoIT), the country now has more than 1,000 plastics companies, located mainly in HCM City and the southern provinces of Dong Nai, Binh Duong and Long An, generating about 118,000 jobs.

Le Quang Doanh, chairman of the Viet Nam Plastics Association (VPA) said the sector needed restructuring to raise the proportion of value-added products such as packing and construction materials by 2015.

Ho Thi Kim Thoa, deputy minister of MoIT, affirmed the sector had great potential for the domestic sale of household products.

In terms of technical products made for electronics, construction and other manufacturing sectors, Vietnamese products were greatly appreciated by importers, she said.

"To sharpen the competitive edge of local producers, manufacturers need to further improve the quality of their products, diversify designs and expand their distribution networks," she said.

Doanh recommended the Government and relevant State bodies develop systems to collect waste plastics more systematically, as the resources would help ease pressure to import raw materials for local production in the face of a global price hikes.

"This will not only help Viet Nam protect environment, but also save foreign currency spent on imports," he said.

Viet Nam currently needs about 2.2 million tonnes of raw materials such as polyethylene (PE), polypropylene (PP) and polyvinyl chloride (PVC) and hundreds of other chemical accessories, whereas local sources can only provide 450,000 tonnes.

Dao Duy Kha, deputy general director of the Viet Nam Plastics Company, pointed out deficiencies in the sector, particularly in design and products that lacked the qualifications necessary to meet standards set by international importers, with export value only accounting for a tiny 0.02 per cent of the total global export value.

Experts have urged companies to apply modern technologies to improve product quality and cut costs.

Truong Thi Huyen Nga, an official from the MoIT's financing department said that to encourage local companies to produce materials, the Government should offer preferential interest rate loans for a duration of 10-15 years.

Corporate income tax should be reduced to 10 per cent from the current rate at 25 per cent in the first five years of operation since it makes profit, and to 15 per cent in the next five years, she suggested.

Nga also urged firms to conduct further market in existing markets and explore new opportunities.(Syed Rashid Ali, Karachi, Pakistan)