A line of plastic moulding machines with robots is pictured at Cho Lon Plastic Co. The domestic plastic industry continues to face a shortage of raw materials. — VNA/VNS Photo Van Khanh

HCM CITY (Biz Hub) — Increasing exports notwithstanding, the plastic industry faces some serious difficulties, including a continued shortage of raw materials, according to the Viet Nam Plastic Association (VPA).

The industry is highly dependent on imports, buying about 80 per cent of the polyethylene, polyvinyl chloride E, and polyvinyl styrene it needs (around three million tonnes a year), mostly from South Korea, Taiwan, Thailand, Singapore, Saudi Arabia, Japan, and Malaysia, the association said.

It can only source certain raw materials like polyvinyl chloride, polyethylene terephthalate, and polypropylene locally.

Speaking at a review meeting organised in HCM City last Saturday, Ho Duc Lam, VPA's chairman, said plastic exports reached US$2.05 billion last year, a year-on-year rise of 15.8 per cent.

Markets abroad

The products are shipped to many markets like Cambodia, Laos, India, Sri Lanka, Japan, China, the EU, Taiwan, and the US.

The Viet Nam-EU Free Trade Agreement, for which negotiations are underway, could be an opportunity for Vietnamese plastic firms exporting to the EU, which bought 25 per cent of Viet Nam's total exports last year.

However, the EU has some non-trade barriers in place, which could deprive Vietnamese exporters of tax breaks, Lam said.

For instance, the EU requires exporters to clearly state the origin of the chemicals they use and do research on the impacts caused by their products, which would also result in higher production costs, he said.

Failure to satisfy the conditions would not only mean they cannot benefit from lower tariffs under the FTA, but could even be banned in that market, he said.

The consumption of plastic products has shot up in the past few years. For instance, it was 22kg per capita per year in 2008 while by 2013 it was up to 35kg.

It is expected to rise to 45kg by 2020, according to industry insiders.

This has sparked a scramble among producers to improve technologies and thus their products so that they can capitalise on this demand. — VNS