Many Vietnamese plastics companies have become targets of foreign conglomerates planning to conquer the Vietnamese market.
Thai SCG Group, for example, not only has a 20 percent stake in Binh Minh Plastics, considered the ‘trump card’ in the southern market, but also has 23.84 percent stake in Tien Phong Plastics, a 50-year-old company in the north.
Besides, through its subsidiary TC Flexible Packaging, SCG has spent $44.4 million to acquire an 80 percent stake of Batico, one of five plastic packaging manufacturers.
SCG’s President Kan Trakulhoon said that SCG would spend more money to expand its market share in Vietnam. And analysts believe this will help occur because they believe in the group’s financial capability and interest in the Vietnamese market. Just within two years, SCG acquired stakes in 22 Vietnamese companies.
Vietnamese plastics companies are also being eyed by Japanese, who can see great potential as Japan has outstripped the US to become Vietnam’s biggest plastic packaging export market.
Japanese investment funds have injected money into United Packaging, Goldsun Printing and Packaging and Dong A
|Plastics companies' high growth rate of 11 percent in the last five years has attracted the interest of foreign companies.|
Meanwhile, South Korean investors have been increasing their presence in Vietnam by increasing their stake in listed plastic companies. Analysts discovered that South Koreans now hold the key positions at Tan Tien Plastic Packaging Company with a 42 percent stake, while former president Le Minh Cuong now holds a 23 percent stake only.
Tran Viet Anh, deputy chair of the HCMC Rubber & Plastics Association, commented that the increased pressure has forced many Vietnamese plastics companies to sell shares to foreign investors in hopes of improving financial capability, reforming technology and findinf new export markets.
Anh said the 3 percent tax rate imposed on import petrochemical products, including PP beads, has eaten into enterprises’ profits.
Six months ago, in an effort to unite Vietnamese plastics companies to protect the companies against big foreign rivals, the Vietnam Plastics Association lodged a petition to the Ministry of Finance, asking for delay of the implementation of the 3 percent tax policy.
However, the ministry replied that Vietnam needs to comply with its commitments made when joining the WTO. The ministry said they would have PP supply sources from domestic oil refineries.
Vietnam needs 3.5 million tons of input materials of different kinds – PE, PP, PS and PVC – every year, and hundreds of supporting chemicals. The figure is expected to increase to 5 million tons by 2020.