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Opportunities for the plastic packaging industry in Vietnam from the ban on the use of plastic in Thailand

Thailand's ban on single-use plastic bags, effective from January 1, 2020, has had a significant impact on the country's packaging industry. It also opens the prospect of shifting production and business of packaging manufacturers to neighboring markets like Vietnam.

Thailand's ban on single-use plastic bags

Thailand's Natural Resources and Environment Minister - Varawut Silpa Archa said: "Previously, Thailand ranked 6th among the world's leading countries to dump their garbage into the sea. But within the last 5-6 months, we have downgraded 4 ranks, now only ranked 10th. This result is thanks to the cooperation of the Thai people ”.

With a campaign called "Every day say no to plastic bags", Thai officials hope the campaign will help reduce 45 billion plastic bags or 225,000 tons of plastic waste each year. Shoppers in Thailand will now be charged between 5 and 10 baht (0.17 to 0.34 cents) per plastic bag if they request. In addition, in early 2022, Thailand will also enact a ban on disposable food containers, plastic straws and plastic cups.

Currently, plastic bags have been banned at more than 25,000 retail stores of large corporations in Thailand such as Central Group, The Mall Group and Charoen Pokphand Group (the operator of 7-Eleven convenience stores). Naphat Thipthanakit - managing director of Pack and Save, a packaging company, said that their orders have dropped by about 90% since the beginning of 2020.

According to Somchai Techapanichgul, chairman of the Thai Plastic Industries Association (TPIA), the association includes about 400-500 companies, most of which are small- and medium-sized enterprises (SMEs) who are strongly dependent on domestic plastic demand. Therefore, the ban would make it difficult for many SMEs to survive. Thus, some businesses may choose to move to Vietnam - an ideal market to replace Thailand.

Opportunities for plastic packaging industry in Vietnam

Although Vietnam has been carrying out its anti-plastic roadmap towards 2025, the country’s regulations are not the same as in Thailand. Therefore, moving business to Vietnam may be a good choice for Thai plastics manufacturers in the short term. Thus, packaging manufacturers in Thailand will have to prepare to bring their operations in line with modern standards and sustainable principles if they wish to work in Vietnam for the long term.

Plastic consumption in Vietnam has been robust in recent days due to the coronavirus outbreak. With most schools in the country allowing students more time off, it has led to tremendous food consumption in supermarkets, where most products are wrapped in plastic.

The epidemic has also increased the medical face-mask output in the market. According to Doximex – a local face mask manufacturer – its capacity has been raised by as much as 10 times since the outbreak. This has raised the company’s plastic demand because each face mask is wrapped in plastic packaging. As Vietnam has not yet issued such a ban like Thailand and the plastic consumption remains high, the market is a promising destination for packaging manufacturers.

Bracing themselves for the prohibition, Thailand-based plastic and melamine firm SrithaiSuperware has already invested in Vietnam to reallocate production, according to company chairman Sanan Ungubolkul. “Our company would much rather focus on expanding business in Vietnam, where GDP growth is relatively high and the legal framework is favourable,” he said.

According to Vietnam Investment Review

 

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