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The Vietnam Plastics Association (VPA) has formally submitted a request to the Ministry of Finance to maintain import duties on polypropylene (PP) at the current level of 3% following the proposal from the Ministry to lift the rate to 5% starting 2020 last week. 

The Association said that the increase in import duties would hurt the local manufacturers severely given the fact that three domestic producers have not been able to meet the local demand.

In fact, according to VPA, Binh Son Refining and Petrochemical Company (BSR) only has an annual capacity of 150,000 tons/year while since starting up in 2018, Nghi Son Refinery and Petrochemical has only been able to produce about 300,000 tons/year, lower than the nameplate capacity of 370,0000/ton year.

Moreover, Hyosung Vietnam’s new PP plant has an annual capacity of 300,000 tons/year, however, only one-third of the capacity is to supply the plastics sector, the remainders are for the textile and garment sectors.

VPA expected demand for PP in Vietnam to grow about 11.38% in the next five years, from 1.4 million tons in 2019 to approximately 2.2 million tons in 2023. 

Mr. Ho Duc Lam, the President of VPA added, “Looking at the company type, the petitioners are mostly foreign direct invested companies, who have already been enjoying plenty of tax benefits while manufacturers are mostly local companies. Lifting import duties would hurt the competitiveness in the cutthroat end-product market.”        

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Vietnam