THAILAND’S AMBITION TO ACQUIRE VIETNAM PLASTIC INDUSTRY

Thailand's SCG Group has just announced the acquisition of 70% of Duy Tan Plastic Manufacturing Joint Stock Company's shares. Subsidiary SCG Packaging (SCGP) will be the entity receiving the transfer of shares and specific details will be announced in mid-2021.

The deal is part of SCG's 10 billion baht ($ 334 million) investment plan to expand its business in Vietnam, a market that is in great demand and continues to increase in plastic packaging products.

In the announcement, SCGP CEO Wichan Jitpukdee said that the company has been continuously increasing its investment in Vietnam and this brings revenue growth of more than 10% per year.

Duy Tan is one of the leading enterprises in the Vietnamese market for hard plastic packaging products, with the main customers being multinational companies and domestic FMCG enterprises. 80% of Duy Tan's products are sold in Vietnam, 20% are exported to the US and other markets.

In 2020, Duy Tan Plastic will achieve revenue of 4,700 billion VND (equivalent to 6.1 billion baht), with total assets reaching 5,000 billion VND (6.5 billion baht) by the end of the year. The annual capacity of this business is 116,000 tons of hard plastic packaging and household plastic products.

Therefore, the investment in Duy Tan will help SCGP expand SCGP's hard plastic packaging business across ASEAN while strengthening the company's capacity to serve FMCG manufacturers and consumers. in Viet Nam.

Before the above deal, SCG approved a subsidiary named Nawaplastic Industries (Saraburi) Co., which in turn purchased 20.4% shares of Binh Minh Plastic JSC (BMP) and 23.84% shares of Tien Phong Plastic Joint Stock Company (NTP).

In 2015, SCG continued to buy back an 80% stake in Tin Thanh Plastic Packaging Joint Stock Company (Batico) for 1.5 billion baht (about 44.4 million USD).

That company has acquired Duy Tan Plastic, one of the leading companies in the Vietnamese market for hard plastic packaging products.

According to Mr. Ho Duc Lam, Chairman of the Vietnam Plastic Association, Thailand with steps to prepare to enter the Vietnamese plastic market methodically, with a professional distribution system. For example, plastic products of Thai enterprises are prioritized for official distribution at Metro wholesale centers stretching across the territory of Vietnam.

According to the plastic industry report of FPT Securities Joint Stock Company - FPTS released in September 2019, Vietnam's plastic industry is one of the industries with relatively fast growth compared to the economy in general. In the period 2012-2017, Vietnam's plastic industry grew on average 11.6% a year, faster than the 3.9% growth rate of the world plastics industry and faster than the average GDP growth rate. about 6.2% of Vietnam in the same period.

The size of the plastic industry in 2017 is estimated at USD 15 billion, equivalent to about 6.7% of Vietnam's GDP in 2017. In which, the largest proportion is the packaging plastic and the construction plastic. In addition to serving domestic consumption, Vietnam's plastic products are currently present in more than 160 countries around the world.

Meanwhile, according to estimates of the Vietnam Plastic Association, in 2020, the revenue of the plastic industry will maintain the growth momentum at 10.9% compared to 2019, the total revenue is about 22.18 billion USD. The plastic industry still maintains export turnover growth, reaching 3.654 billion USD, although the increase of 6.3% is only half compared to 2019.

During an interview with the Ho Chi Minh City Law Newspaper, economist Dinh The Hien said that the massive investment of foreign businesses, especially Thailand, in the Vietnamese plastic industry, investment incentives in terms of land, taxes, and raw material prices; cheap energy, labor to save costs to get the best price. Vietnam's participation in a series of free trade agreements also brings significant advantages for foreign businesses.

“With a strong investment in the plastic industry, foreign businesses also take advantage of the value chain from input to output that they have built-in Vietnam. For example, Thai people have invested in a plastic resin factory, have an existing factory system and a wide distribution network from mergers and acquisitions of retail systems in Vietnam ”, said Mr. Hien.

This pressure is obviously huge for Vietnamese plastic companies, especially that most domestic plastic enterprises are always in a state of lack of capital, outdated technology, and lack of highly qualified human resources.

Leaders of the Vietnam Plastic Association said that Vietnamese plastic companies' difficulty also comes from dependence on imported raw materials. The plastic industry always has relatively high operating costs for production and business, leading to the high cost of goods sold. Therefore, only objective factors such as exchange rate, loan interest, and import tax policy change suddenly, net profit will immediately decrease.

Source: Dat Viet

>>>Click HERE for Industrial news<<<

Contact

MEGA VIETNAM

Office address: Floor 2-A2-IA20, Nam Thang Long Urban Area, Pham Van Dong Street,

Dong Ngac Ward, Bac Tu Liem District, Hanoi City, Vietnam

Tel: (+84) 24 375 89089; Fax: (+84) 24 375 89 098

Website: megavietnam.vn

Hotline: 1800.577.728 Zalo: 0971.023.523