In an interview on Vietnam Investment Review, Mr. Le Xuan Dong, Managing Director and Head of Market Research and Consulting at FiinResearch, shared some insights on the development of Vietnam's packaging industry.

Vietnam packaging sector enjoyed an annualized growth rate of 13.4% during the period 2015 – 2020 and is forecasted to continue its double-digit growth rate in the years to come. The market is driven by rising packaging demand from F&B, consumer goods, export activities as well as the robust development of modern trade retail.

The pandemic, especially the strict social distancing measures against the fourth wave of COVID-19 in Vietnam, has resulted in severe impacts on the packaging sector:

• Sharp increases by 20% - 40% in prices of imported raw materials from mid-2020 resulted in a hard hit for packaging manufacturers’ profit margin
• Supply chain disruptions (i.e. strict social distancing orders, increasing sea freight costs, etc.) challenged packaging manufacturers’ business continuity.
• Liquidity crunch of domestic packaging manufacturers to service their debt obligations

Despite the uncertainties by COVID-19, many foreign companies have been ramping up investment activities in Vietnam's packaging industry. In particular, foreign investors still realized the long-term growth potentials and promising business opportunities with 56 newly registered FDI projects in the packaging industry, totaling at US$516mn during the period Jan 2020 - April 2021.

Recently, Vietnam packaging sector witnessed rising society requirements and customer awareness on environment protection and sustainable development. In fact, brand owners and packaging manufacturers have focused more on environment protection by using environment-friendly packaging materials. From brand owner side, international F&B companies now is eyeing on recycled packaging products. Also, Duy Tan Plastics, the leading rigid packaging manufacturer in Vietnam, has been developing its first US$60mn-recycled plastic bottle factory in Vietnam with designed capacity of 100,000 tons p.a.

Read the full article HERE.