Vietnam’s plastics exporters eye new opportunities in Europe

Vietnam’s plastics exporters eye new opportunities in Europe

Exports to the EU currently account for about 18.2 percent of the Vietnamese plastics sector’s export value. The EU-Vietnam Free Trade Agreement (EVFTA) promises new opportunities for the sector to promote exports and attract investment.

The domestic plastics sector grew strongly in recent years

Top 10 external supply sources

General Department of Vietnam Customs data show that the export value of the plastics sector grew continuously in recent years at an average annual rate of 14-15 percent. Vietnamese plastics products have been exported to more than 150 markets. According to the International Trade Center, plastics products of EU member countries currently have the advantage over imported products. However, given that they are not subject to anti-dumping taxes ranging from 4-30 percent, Vietnamese plastic packaging products are more competitive than those of other regional countries, such as Thailand and China.

In 2019, Vietnam ranked among the top 10 external plastics supply sources of the EU. Imports from Vietnam reached US$930.6 million in 2019, an increase of 5.2 percent compared with 2018, accounting for 0.4 percent of total value of plastics imports by the EU. Major import markets included Germany, France, Italy, the UK, and Belgium.

EVFTA opportunities

According to the European-American Market Department of the Ministry of Industry and Trade, the current basic rate of taxes imposed on most Vietnamese plastics products (6.5 percent) was reduced to zero as soon as the EVFTA took effect in August 2020, with no tariff quota applied.

To be eligible for tariff preferences, exporters must abide by EVFTA rules of origin. However, the rules of origin applied to plastics and plastic products are flexible, allowing producers to use a maximum of 50 percent of materials without certificates of origin. Flexible rules of origin will facilitate Vietnam’s plastics exports to the EU because domestic plastics companies still depend heavily on material imports.

The Vietnamese plastics sector has to import millions of tonnes of materials such as PE, PP and PS to make products for domestic sale and export because domestic supply meets only 15-30 percent of the actual demand.

Another challenge for the Vietnamese plastics sector, according to the European-American Market Department, is the expanding use of the P.E.T plastic packaging in the EU, because packaging products made of traditional materials still account for a large percentage of the sector’s export structure.

However, experts said, some domestic companies have taken the initiative in shifting to P.E.T production for exports to major markets, including the EU. Construction and engineering plastics can also be exported to the EU if meeting strict technical requirements of European importers.

VietNam Economic News