A file photo of plastic pellets. The Vietnam Plastics Association proposes keeping the import duty on plastic material unchanged at 3% - PHOTO: VPA

The association has sent the proposal to the ministries of Finance and of Industry and Trade.

According to the association, the demand for polypropylene plastic pellets in Vietnam has annually increased by 200,000 tons over the last five years, from 528,800 tons in 2014 to nearly 1.3 million tons last year, while local supply has fallen far behind.

VPA forecast that the demand for polypropylene plastic pellets will increase 11.38% per year from 1.4 million tons this year to nearly 2.2 million tons in 2023.

Meanwhile, a polypropylene plant in Dung Quat Economic Zone in Quang Ngai Province could reach a maximum capacity of 150,000 tons per year, and a polyethylene and polypropylene plant in Nghi Son Refinery and Petrochemicals in Thanh Hoa Province, less than 300,000 tons per year.

Further, Hyosung Vietnam’s polypropylene plant has a designed capacity of 300,000 tons per year but only one-third of the polypropylene produced is used by the plastics sector. The remainder is used by the textiles and garments sector.

According to the association, the capacity to supply polypropylene plastic pellets among these three plants may even decrease in the coming months, forcing plastics enterprises to import larger volumes of the product.

Therefore, the tax hike will hit the fledgling domestic plastics sector hard. If the tax is raised to 5%, domestic plastics enterprises will be subject to additional costs of over VND1.2 trillion for plastic material imports in the next five years, noted VPA Chairman Ho Duc Lam.

Polypropylene plastic pellet suppliers in countries with which Vietnam has signed free trade agreements may raise their selling prices. As a result, local plastics processing firms will have to pay an extra VND3.6 trillion in the next five years, Lam said, adding that they will find it hard to compete with rivals from other countries in the Southeast Asian region, South Korea, China and Japan. SGT

Hung Viet

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