SCG headquarters in Bang Sue District, Bangkok, Thailand. Photo courtesy of SCG
After buying Duy Tan Plastic Corp, Thailand’s Siam Cement Group (SCG) is cementing its domination of Vietnam’s plastic production industry.
Under the contract signed on February 9 via a virtual conference, Duy Tan will sell 70 per cent of its shares in five of total twenty-two subsidiary companies, including Duy Tan Plastic Manufacturing Corp and Duy Tan Long An Corp, to SCG’s SCG Packaging, Duy Tan said.
Duy Tan Plastic is a leading company in the plastic goods market in Viet Nam with revenue of 4.7 trillion dong ($204 million) last year. It has nearly 1,000 commodities units and 16,000 distribution agents across the country. The company’s annual capacity reaches 116,000 tonnes of hard plastic packaging and plastic goods.
SCG, Thailand’s largest cement producer, will buy the stakes over three years, starting from 2021. The deal takes a long time as it is based on business results, Duy Tan Plastic said.
Through the deal, SCG and Duy Tan Plastic want to create a solid foundation for a completed supply chain.
Duy Tan Plastic aims at developing hard plastic packaging products, plastic goods and expanding export markets, while the investments help SCG Packaging broaden its hard plastic packaging businesses in ASEAN, especially strengthen capacity to serve producers and consumers of fast-moving consumer goods in Vietnam.
The deal is a part of SCG’s investment plan worth 10 billion baht ($330.9 million) to extend its businesses in Vietnam that has big and growing demands in plastic packaging products.
SCG Packaging CEO Wichan Jitpukdee said the company will keep investing in Vietnam, resulting in revenue growth of over 10 per cent each year.
The plastic production industry in Vietnam has around 3,300 enterprises with total value of approximately $18 billion.
The upstream sector of this industry includes petrochemical refineries and chemical enterprises whose main activities are to convert fossil materials into raw plastic beads.
Meanwhile the downstream sector is turning raw plastic beads into plastic products. The downstream can be divided into four main segments, including plastic packaging products, plastic building materials, plastic goods and engineering plastics.
With the deal for Duy Tan Plastic’s shares, SCG is dominating Vietnam’s plastic industry, especially in plastic packaging products and plastic building materials. These two segments account around 61 per cent of the total market value.
In 2019, SCG Packaging founded Vina Kraft Paper in Binh Duong province to produce paper packaging products with total capacity of 500,000 tonnes per year.
The company continued to invest in Tin Thanh Packing JSC (BATICO) in 2015. And recently SGC bought 94 per cent of Bien Hoa Packaging JSC’s stakes, with the deal worth of 2.07 billion dong.
SCG also owns stakes in many plastic companies including Binh Minh Plastics JSC, Vietnam Construction Materials JSC, Prime Group, Viet Thai Plastchem Joint Venture Co Ltd, TPC Vina Plastic and Chemical Corp Ltd, Vietnam Chemtech Co Ltd and Minh Thai Plastic Material Co Ltd.
In June 2018, SCG signed a contract to buy 29 per cent of Viet Nam Oil and Gas Group’s (PetroVietnam) shares in Long Son Petrochemical Complex Project, raising its equity from 71 per cent to 100 per cent with total investment value of 8.5 billion baht per year.
VIET NAM NEWS/ASIA NEWS NETWORK
