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Over the past 10 years, Vietnam's plastic industry developed rapidly with an annual growth rate reached 15 - 20%.
However, since the beginning of 2008 until now this sector are gong to suffer from price hike of raw materials, making plastic manufacturing businesses under a lot of influence, as long as production, even to accept losses as not dare to increase product prices.
Furthermore, raw material (plastic resin types are produced from the composition of the oil) has increased by nearly 50% year to date, has led to higher prices of plastic resins.
Always have produced in moderation
According to the Vietnam Plastics Association (VPA), the biggest challenges that businesses are facing is the supply of raw materials are largely dependent on imports and price volatility of raw material continuously.
Up to now, Vietnam has only two PVC resin manufacturing plant is Co. TPC Vina Plastic and Chemicals (TPC Vina) with a total capacity of about 250,000 tonnes of PVC per year and another plant of the Joint Venture Company LG Vina chemical (LG Vina) annually provides approximately 150,000 tons of DOP.
Due to the domestic production of raw materials only meet about 10% of the needs of enterprises of plastic resin per year should still have to import 2 to 2.5 million tons of raw materials such as PE, PP, ABS, PC, PS ...
Most types of plastic materials are produced from oil and gas, the price of plastic raw materials directly affected the price of these commodities.
Another difficulty is that if the first few months of 2008, resin prices increased every month, this increase weekly. Every week, prices rose by 20-30 USD / t and up to this point in the range 2.000- price was $ 2,200 / ton, up about 50% YTD.
While raw material prices and cost of production inputs, the cost doubled plastic products increased significantly not only in the range of 10% from the beginning of the year. If the price of a ton of PVC powder is 830 USD in 2006, increased to 960 USD in 2007, but now has risen to $ 1,020.
However, the most worrying thing is the price of plastic raw materials and often unexpected spike, causing manufacturing enterprises not able to respond. However, they can not continually adjust its product prices due to customer retention.
Nguyen Thi Kim Hang, deputy director of Dat Hoa Plastics lamented: "Business're gong to suffer losses, but have not dared to touch the belly prices for fear of losing traditional customers. If combined with other production costs also increased as now, we are suffering from a loss of 15% on the cost of products sold and can hardly hold out forever. "
Along with rising raw material prices is the competition of plastic items more aggressively in the market both domestic and world markets. With advantages in capital, technology, experience and consumer markets, foreign investors to build more and more plastic factory in Vietnam.
Need linked to competitiveness
Currently most of the plastic business formation and development of the family company, so limited capital, limited management skills, lack of updates. These firms often invest heavily on simple items, requiring more labor and less profit. Therefore, not enough plastic industry rose to become auxiliary industry to other industries.
Besides, the development of the plastics business overall unplanned, spontaneous but heavily. Private investors often focus on the production of popular items, should lead to overlapping or competing against each other, causing waste of capital and low economic efficiency. The plastics business has not really mount, support and protect each other in the market mechanism. So not to promote the synergy of the industry.
According to the Ministry of Industry and Trade, businesses need to link industry to cooperate for the implementation of large and long-term contracts, instead of the existing more than 2,000 enterprises, but are mostly medium-sized, even as existing small present.
Product, the Ministry recommends increased investment businesses and apply new technologies for high-tech plastics, especially the packaging is biodegradable to protect the environment, serving local products localized automotive, motorcycle, electronics, products for agriculture and water supply infrastructure, consumer plastic products ...
VPA also said that to increase the competitiveness of Vietnam plastic items on the market, to improve the capacity, quality and reduce the cost of products is required. Along with the investment in technological innovation, businesses need to find solutions to reduce the cost of production, which reduces electrical energy consumption is significant and decisive.
Mechanical engineering industry also need to coordinate with the plastics, themselves or joint ventures with foreign partners, step by step production equipment, molds for plastics businesses can reduce investment costs. Plastics businesses need to work together more closely, especially in the same industry in order to support and protect each other in the manufacturing business before the competition of foreign goods.
To overcome difficulties ahead for plastics, VPA is proposed that the government has specific policies to support domestic manufacturing enterprises. Along with that, calling for enterprises seeking to reduce production costs in order to create a more competitive price.
Additionally, VPA also has recommendations to the ministries concerned to allow plastics to be imported plastic scrap for recycling clean the plastic resin raw materials to reduce the cost of plastic particles in water.