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Demand for plastic packaging in ASEAN region

September 1, 2019
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Why this is important to Wisconsin businesses: Bags, pouches and spill-proof packaging, as well as on-the-go personalized packs, are all especially in demand.

The steady economic growth of the six major economies in the Association of Southeast Asian Nations (ASEAN)—Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam—has been accompanied by growth of the plastics industry in these countries.

These countries’ global imports of plastics and articles thereof (HS Code 39) more than doubled in the last decade—from $25 billion in 2008 to $54 billion in 2018, according to data from the International Trade Centre. The U.S. is within the top 10 supplying countries to this region, with imports from the U.S. growing by about 50% for the same period. However, with stiff competition, the combined market share of U.S. exports for these six countries fell from 10% to 7% in the last 10 years. Demand is driven mainly by packaging, as well as the construction and automotive sectors.

Demand for plastic packaging is growing along with a booming packaged and processed food and beverage industry, supported by thriving modern retail and e-commerce sectors. E-commerce is also creating demand for secondary packaging. Within the packaging sector, flexible packaging, which is estimated to reach $7 billion by 2024, is a key demand driver for plastics in Asia. Growing awareness of the benefits of flexible packaging, such as its low cost and flexibility to suit multiple shapes and sizes, along with the implementation of regulations for safe packaging, is leading to rising adoption of bags, pouches and spill-proof packaging. In addition, small and functional on-the-go personalized packs have gained traction due to the convenience they offer to users living an increasingly fast-paced urban lifestyle.

Key markets for plastics that are mainly used in the food and beverage industry are as follows:

  • Thailand has one of the most well-developed and advanced food processing industries in the region, with more than 10,000 processing plants. The food industry is the country’s third largest, contributing more than 20% of its $505 billion GDP. Aside from food and beverage, the Thai government also aims to become a regional hub in Asia for bioplastics.
  • Indonesia is another leader in the flexible packaging market within ASEAN, with food packaging accounting for a majority of the country’s plastic consumption. The food and beverage industry’s contribution to Indonesia’s $1 trillion GDP has increased steadily over the past four years, reaching 6.25% in 2018.
  • Malaysia has more than 1,500 plastic production companies producing packaging for its food and beverage sector, which has a forecast value of $261 million in 2019, according to Statista. Besides food and beverage, Malaysia’s pharmaceutical industry is also driving consumption for plastic packaging.
  • Vietnam is a large food producer and exporter and has more than 5,500 food processing companies. The food processing sector contributes around 15% of the GDP and is considered one of the country’s high-priority industries.

Meanwhile, infrastructure development and demand for automobiles, driven by rapid urbanization and increasing purchasing power, are the key factors behind the growth of engineering plastics in ASEAN.

The construction industries of the Philippines and Vietnam rank third and fifth worldwide for forecasted annual real growth in value, presenting opportunities to supply building and construction materials characterized by strength, weather resistance and long lifespans that well-designed engineering plastics can offer.

The automotive sector is another key user of plastics. The region produced over 4 million vehicles in 2018, with Thailand leading the way in output. Auto manufacturers in the region are seeking weight optimization without compromising on functionality and safety features. This has increased the average plastic content in vehicles over the years, with a preference for engineering plastics that offer both functionality and performance. This includes plastics, such as those that provide various types of resistance (e.g., abrasion, chemical and heat resistance) and those that can also be easily processed.

The flip side of the boom in ASEAN’s plastics sector is a growing waste management problem. According to the United Nations Environment Programme, together with China, four ASEAN countries—Indonesia, the Philippines, Thailand and Vietnam—contribute about half of all the plastic waste that ends up in the oceans. Plastic bag bans and tax-based actions might not be enough to address the issue, and a broad, holistic approach will be needed. In this scenario, companies providing solutions or technologies in recycling, sustainability and the circular economy are highly sought after.

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