Market News

Vietnam has retained its attractiveness as a manufacturing hub for a growing number of foreign investors. Undoubtedly, Vietnam’s plastics market has been on the upswing due to rising demand from end-user industries. Estimated at 10.9 million tons in 2024, Vietnam’s plastic market is projected to grow by a CAGR of 8.4% from 2024-2029, reaching 16.4 million tons by 2029, according to a report by Mordor Intelligence. The report attributes this growth to the resumption of activities in end-user industries to pre-pandemic levels, with construction activities in industrial estates driving demand for plastics, alongside with stable demand from the F&B packaging, electronics/electrical, automotive, and medical and healthcare sectors.

Vietnam has been ranked high on the list for foreign companies looking to diversify their operations and expand in the Southeast Asian region. A combination of favorable business incentives and competitive operational cost are among the top reasons for this trend. The Ministry of Planning and Investment reported an increase in investment inflows, with registered foreign direct investment amounting to US$15.2 billion in the first half of 2024 alone, 13% higher than the same period in 2023. This figure is expected to reach US$40 billion by end-2024.

Industries receiving significant investments include semiconductor and electronics, construction, automotive, energy and consumer products. These investments are predicted to fuel activities in these sectors, thereby creating demand for plastics. Vietnam has also entered into bilateral and multilateral free trade agreements (FTAs), paving the way for reducing import tariffs and opening up new markets. These agreements have encouraged Vietnamese companies to explore the latest technologies to push their operations toward the global market.

To date, there are more than 4,000 plastic product producers in Vietnam, according to the Vietnam Plastics Association, with around 90% being small and medium-sized enterprises. In plastics and rubber industries, extrusion technology is seen as the dominant method for producing plastics products to be used in the construction industry, while the fast-moving consumer goods industry will drive demand for injection molding and blow molding technologies. The packaging sector, which accounts for the largest share of Vietnam’s plastics market, has seen substantial growth over the years as the demand for lightweight, convenient and safe packaging products continues to rise in the food and beverage, medical and healthcare and personal care products.

Rising middle-class incomes, e-commerce growth and consumers’ growing awareness on environmental protection are key factors influencing plastics utilization in Vietnam. Over the years, thanks to the growth momentum of the economy, major investment inflows have positioned the country as one of the Southeast Asia’s fastest-rising manufacturing hubs.

These investments not only bring capital into the economy, but also facilitate the adoption of the latest technologies that benefit Vietnam’s industrial sector. Automation, artificial intelligence and Internet of Things (IoT) are recognized as crucial for transforming the production processes, attaining sustainability and improving supply chain management. Several examples of new investments and key initiatives were made in 2024.

Thantawan Industry Public Company Limited, a leading producer of plastic packaging in Thailand, signed a deal for a 30-year factory lease, marking the company’s first in Vietnam. The production plant is located in the Saigon VRG Investment JSC-invested Phuoc Dong Industrial Park, and covers 4.3 hectares with a factory floor area of 24,436 square meters. The packaging production facility, designed to achieve an annual production capacity of 9,000 tons to meet rising demand in the Southeast Asian markets, will be operated by the company’s subsidiary, Thantawan Industry (Vietnam) Co., Ltd..

The quest for circular economy is gathering momentum in Vietnam with many plastics companies encouraged to incorporate environmental-friendly practices into production of green products. Duy Tan Plastics Manufacturing Corporation, one of the top 10 packaging companies in Vietnam, is expanding its domestic and international markets through innovations, the adoption of digitalization, and embarking on the circular economy journey. Duy Tan specializes in various types of rigid packaging and caters to both local brands and multinational corporations. The company’s products are exported to 60 countries. Duy Tan has relied on imported machinery to produce premium packaging that meets its diverse markets.

Another booming industry in Vietnam is the automotive sector, projected to grow by 14%-16% annually by 2030. As the Ministry of Industry and Trade sets a target to raise vehicle sales to around 1 million units by 2030 through its proposed “Development Strategy for Vietnam’s Automotive Industry to 2030, with a Vision to 2045,” the industry is spearheading its transition from fuel-powered vehicles to electric vehicles, hybrids, and solar vehicles, as well as other fuel-efficient options. This shift will promote technology transfer and the utilization of high-performance materials for the production of automotive parts. By 2030, domestic production of automobile is projected to reach between 600,000 and 700,000 units, up from current consumption of at least 300,000 units. Vietnam aims to achieve local production of key components in the drivetrain, transmission, and engine by 2030 as the targets to become a global supplier of automotive components and parts.

Homegrown automotive giant VinFast has successfully penetrated both the domestic and global markets despite stiff competition from other well-known brands. VinFast has delivered over 50,000 electric vehicles (EVs) to the domestic market in 2024, solidifying its position as the best-selling brand in Vietnam, and competing head-on with foreign competitors. The company has also been exporting to other countries.

Mitsubishi Motors Corporation, through its subsidiary Mitsubishi Motors Vietnam Co., Ltd., celebrated over 30 years of operations in Vietnam. Mitsubishi started its business in Vietnam in the early 1990s when the country’s automotive industry is still in its infancy. Currently, Mitsubishi views Vietnam as a fast-growing market for its range of vehicles and aims to expand its production and sales in the country.

Geely Auto Group is setting sight on producing vehicles in Vietnam by 2026. The company is partnering with Vietnam's Tasco to construct a US$168 million plant with a production capacity of 75,000 vehicles annually in its first phase. This partnership involves the assembly of Geely models in Vietnam and vehicle sales. The joint venture is for CKD (Completely Knocked Down) project, where vehicles will be assembled in Vietnam using imported parts and components. The assembled vehicles will include models under the Lynk & Co and Geely Auto brands, with plans to expand to other brands in the future.

Electronics giants have made significant investments in Vietnam

Electronics production has been identified as a key sector by the Vietnamese Government aiming for the country to become a major producer of electronics by 2030 through the adoption of advanced technologies. The sector has seen rising exports over the years and has attracted significant investments from foreign companies such as Samsung, Foxconn, and LG. Most electronics production in Vietnam focuses on the assembly of imported parts and components.

The display maker BOE Technology Group, a supplier for both Apple and Samsung, is establishing its factory in the southern province of Ba Ria-Vung Tau with an investment of US$275 million. The plant will assemble and manufacture televisions, high-resolution screens for computers, electronic components, and plastic parts, with a projected capacity of over 134.7 million products annually.

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