Thai Plastics Industry Adding Value, Environment Protection

  • Thai Trade Center Los Angeles
  • November 16, 2012

Thailand is strengthening its role as a leading global hub of plastics manufacture, with makers placing greater emphasis on value-added and environment-friendly products, all underpinned by sturdy government policies. Whether employed for design beauty or structural integrity, plastics are crucial to most sectors in the country. Active in everything from smartcards to furniture, the Thai plastics industry is growing consistently, and demand in the vigorous domestic economy is the key driver.

By far the packaging and food sector is the heftiest consumer of plastic in Thailand. Packaging also accounts for the most considerable share of the country’s plastic exports at 31%. Packaging firms’ consumption of the vital material totals US$3.42 billion per year, according to the Plastics Institute of Thailand.

Of the four types of packaging materials, plastic ranks second with a 25% share, following paper’s 40% and ahead of metal and glass. There are two main kinds of plastic packaging: “rigid” such as bottles and boxes and “flexible” like bags and envelopes. Thai manufacturers offer all types and are proficient in the use of polyethylene (PE), polypropylene (PP), polyvinyl chloride (PVC), polystyrene (PS), polyamide (PA), polyethylene terephthalate (PET) and polyvinylidene chloride (PVDC). They are also highly knowledgeable in production processes such as injection molding, film extrusion, blow molding and thermofolding.

Food products, from ingredients and vegetables to snacks and meals to milk and juice, go through 60% of all plastic packaging in the country. With strong progress under the government’s program to promote Thailand as the “Kitchen of the World,” the country’s food exports in 2012 should hit a whopping US$32.79 billion, requiring a lot of plastic packaging, according to National Food Institute statistics.

Thailand is the second-biggest food exporter in Asia, trailing only China. The modernizing of regional societies and rapid growth in middle-class buying power across the Association of Southeast Asian Nations (ASEAN) positions Thailand as an excellent location for entrepreneurs investing in plastics, particularly the packaging sector. Opportunities exist in production to meet soaring demand for attractively designed flexible packaging, single-serve packs for ready- to-eat food that suits people with busy lifestyles, and heat-resistant bags for cooking vegetables in a microwave.

Electrical appliances and electronics (E&E) is the industry’s second-largest consumer of plastic materials, devouring US$1.24 billion worth on a yearly basis. The nation is home to about 300 companies that manufacture plastic parts for E&E. Injection molding is the main production process, accounting for 82% of this output.

Thailand’s E&E sector stands very tall globally. When returning to pre-flood levels, the country will regain the title as the world’s largest maker of hard disk drives. Thailand is also the second-biggest producer of air conditioners and fourth for refrigerators. E&E provides 30% of the country’s annual export revenue from all industries, with outbound shipments of appliances and electronics in 2012 projected to reach US$54 billion.

Plastic materials’ contribution to E&E will only intensify. Besides being easy to design, heat- resistant and simple to maintain, the fact that plastic is coming out locally in environment-friendly versions adds to its popularity among enterprises. With more people demanding electrical and electronic products that are better for the environment, E&E suppliers are shifting to cleaner processes and eco-safe models. As a result, naturally degradable bioplastics have emerged as a fast-growing sector.

Medical devices, a US$800 million market in Thailand, are also following the bioplastics trend. In a recent development, PTT Global Chemical Plc announced plans to start manufacturing biodegradable plastic screws and plates within three years. These bioplastic components will target medical applications, mainly in the treatment of bone fractures. The breakthrough is touted as being cheaper for patients than steel materials.

Society is indeed more aware of the importance in protecting the environment and conserving energy. Consequently, recycled plastics are another fast-growing business full of investment opportunity, especially with bottles and bags. Advancements in sorting, shredding and cleaning technologies by local producers are opening the way to heightened application of recycled plastic.

Construction gobbles up US$982.62 million worth of plastic each year. The sector relies on the material for its light weight, low cost, high resistance, and decorative ability. Plastic is applied in many building techniques.

Thailand’s colossal automotive sector absorbs US$897.38 million in plastic for parts on trucks, vans, cars and motorcycles annually. The nation is on track to break into the top 10 of the world’s biggest auto producing countries when output passes 3 million units in 2015. Plastic parts and components, such as those for injection, profile extrusion and others, help car makers reduce vehicle weight, increase fuel economy, and lower the sticker price. In this area as well, automotive bioplastics are gaining ground as a preferred material.

Aside from those major sectors, monofilaments, textiles, footware, toys, recreational products, houseware, eyeglass frames and agriculture-related goods are also substantial users of plastic.

Balancing Business and the Environment

Steady support by the government helps to maintain Thailand as a leading production center. The master plan for continued prosperity of the Thai plastics industry balances enhanced product development and market intelligence with protection of the environment.

The Board of Investment (BOI) offers a range of fiscal and non-tax incentives for investors. Tax-based benefits include exemption or reduction of import duties on machinery and raw materials, and corporate income tax exemptions and reductions. Non-tax incentives include permission to bring in foreign experts, own land, and take or remit foreign currency abroad. Foreign businesses are also entitled to 100% ownership.

To promote sustainable growth in the plastics industry together with protection of the environment, the BOI classifies projects in the manufacture of eco-friendly plastics as priority activities of special importance to the country. Therefore, these are given maximum investment incentives.

Plastics investors will see Thailand become an even more attractive business hub with the launch of the ASEAN Economic Community (AEC) in 2015. That year the 10 member states of ASEAN will liberalize trade and investment among them, enabling the free flow of goods, services, capital and people across the regional bloc. The huge seamless AEC market comprising Thailand, Singapore, Malaysia, Indonesia, Vietnam, Cambodia, Laos, Myanmar, Brunei and the Philippines offers businessmen easy access to 600 million consumers.

“It is good for all that the AEC promotes a lower-cost and easier way for companies to work together in Asia. The AEC and the overall people-friendly approach will be beneficial to our business,” said Randall White, president of Piper Plastics, Inc. With a factory in Rayong Province of Eastern Thailand, the U.S.- based plastics machining, fabrication and distribution company caters to the medical devices, semiconductors, aerospace, food and energy industries.

In addition to the AEC, investors located in Thailand enjoy efficient regional market access through the country’s existing free trade agreements with Japan, China, Korea, India, Australia and New Zealand.

On top of the reliable government support and strategic location, plastics investors also recognize Thailand as a prime production center because of its highly skilled but affordable workforce and state-of-the-art industrial estates.

(Source : Thailand Investment Review, October 2012 Volume 22 No.10 : Publication of the Thailand Board of Investment / Thai Plastics Industry
Adding Value, Environment

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