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Extrusion International 3/2016 47
technical products (15 %). Yet, the industry is still at the “low
end and of low value”, according to Vietnam Plastics Associ-
ation (VPA), with a majority of exports being plastic bags to
Japan. It also relies heavily on imported raw materials, like
polypropylene (PP) and polyethylene (PE) resins, importing an
average of 4 million tonnes of raw materials while domestic
production totals 1 million tonnes.
Meanwhile, with a population of over 250 million, Indonesia’s
government has increased efforts to industrialise and develop
the nation towards becoming the world’s seventh largest
economy by 2030. Its rising middle class, to double to 141 mil-
lion people within the next five years, will drive plastics con-
sumption. According to the Indonesian Packaging Association,
food packaging accounts for 70 % of plastic consumption
sales. The Aromatic, Olefin and Plastic Industry Association (In-
aplas) has set a 6 % growth in domestic demand for the plas-
tics sector, sustained by an improving GDP of 5.3 % in 2016
and upbeat food and beverage and agribusiness sectors.
One of ASEAN’s top exporters of plastic products, Malaysia has
over 1,500 plastic production companies that export to Eu-
rope, China, Singapore, Japan, and Thailand. The packaging
sector accounts for 45 % of the total plastic consumption mar-
ket, followed by electronics (26 %), automotive (10 %) and
construction industry (8 %). However, due to a rise in
Malaysia’s minimum wage to US$ 214 per month, plastic pro-
duction costs have increased within the country by approxi-
mately 10 % over the course of 2015.
Thailand’s plastic consumption is led by packaging (48 %),
electronics (15 %), construction (14 %), and automotive (8
%). Its automotive sector attracts manufacturing opportuni-
ties, although itsoverall cost index (for example, energy, labour,
and property) is 20 to 25 % higher than Indonesia, Vietnam
and the Philippines, largely because of a high quality and ma-
ture automotive manufacturing ecosystem, including tiered
suppliers of automotive components. The country has also in-
vested US$ 60 million into bioplastics development over the
past seven years, with the government pumping in 80 % of
this investment.
Export-oriented Philippines has witnessed weak exports per-
formance, down by 5.8 % in the previous year, because of low
demand from its top buyers: the US, China and Japan. The
semiconductor and electronics industries account for the ma-
jority of the country’s exports. Various measures are being in-
stituted to boost exports, such as the Generalised Scheme of
Preferences (GSP) of the European Union (EU) that is offering
export opportunities to the Philippines by allowing less or no
duties on exports to the EU.
Meanwhile, global chemicals hub Singapore, which has been
voted the world’s most expensive city for expatriates for the
third consecutive year by the Economist Intelligence Unit (EIU),
offsets its high costs by offering strong connectivity through
shipping routes, a developed infrastructure, manpower capa-
bilities and ease of doing business.
Around 95 companies are represented on Singapore’s Jurong
Island, attracting investments in excess of S$ 35 billion, ac-
cording to the Economic Development Board. Providing a
plug-and-play environment, the island allows companies to
quickly ramp up their operations, helping growth in both up-
stream and downstream sectors. Presently, companies like
BASF, ExxonMobil Chemical, Lanxess, Mitsui Chemicals, Shell
and Sumitomo Chemicals have plants. However, BMI Research
expects Singapore to face an uphill climb in 2016, in the face
of a Chinese downturn and regional oversupply. Thus, the
country is banking on the speciality chemical sector as the next
growth area, according to the Economic Survey of Singapore
by the Ministry of Trade and Industry (MTI).
Pushing further the region’s plastics industry, initiatives are
being laid out by plastics trade associations, including the
ASEAN Federation of Plastics Industries (AFPI), the Malaysian
Plastics Manufacturers Association (MPMA), the Thai Plastic
industries Association (TPIA), and the Philippines Plastics In-
dustry Association (PPIA). The associations are working in tan-
dem with international-scale trade agreement blocs, including
the ASEAN Economic Community (AEC), the US-led Trans Pa-
cific Partnership Agreement (TPPA), and the China-backed Re-
gional Comprehensive Economic Partnership (RCEP).
The AEC, which was effected 1 January, features liberalisation
of goods, investments and services and will enable plastic pro-
ducing countries like Thailand, Malaysia and Singapore to
lower duties on finished plastic products, machines and
moulds to other member countries like Vietnam, which buys
about 80 % of its plastic materials requirements from Thai-
land and Malaysia.
Indonesia also imports more than 40 % of its plastics require-
ments from Malaysia, Thailand, Singapore, Europe, and the
US.
The US-led 12-nation TPPA will liberalise trade regulations be-
tween the member countries and also eliminate tariffs as high
as 25 %. The easier access to overseas markets also post ben-
efits for the countries.
The RCEP, made up of ASEAN members, China, Japan, South
Korea, India, Australia and New Zealand, aims to consolidate
the existing ASEAN FTAs and tie-ups with the other six partner
economies. It will impose a 65 % tariff cut, with the percent-
age likely to increase to 80 % within a decade. The RCEP could
also usher into the Asia Pacific Economic Cooperation (APEC)’s
long-time prospect of creating a Free Trade Area in the Asia Pa-
cific (FTAAP).
With these optimistic developments taking place, the ASEAN
plastics industry will witness an expansion. In the ASEAN Busi-
ness Outlook Survey 2014, by the American Chamber of Com-
merce Singapore and US Chamber of Commerce, Indonesia
ranked as the most attractive country for new business ex-
pansion, followed by Vietnam, Thailand, and Myanmar. Avail-
ability of low-cost labour in countries such as Cambodia,
Indonesia, Laos, Myanmar, and Vietnam, renders a competitive
advantage. Overall, ASEAN’s growing consumer bases, broad-
ening of plastic import and export markets, and expanding
foreign trading powers offers foreign investors significant op-
portunities.