Thailand packaging firm expands operation in Vietnam

Thailand’s SCG Packaging (SCGP) is joining hands with its Vietnamese partners under an investment worth 10 billion baht (US$334 million) to expand its packaging solution business in Vietnam, where demand for packaging products is growing.
February 18, 2021 | 08:00
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Mr Wichan, centre, holding the share purchase agreement his company signed online with executives from Duy Tan Plastics Manufacturing Corporation in Vietnam. Photo: Bangkok Post

The latest move is the signing of a share purchase agreement on February 9 to acquire a 70 percent stake in the Duy Tan Plastics Manufacturing Corporation, Vietnam's top producer of rigid plastic packaging products, according to its letter sent to the Stock Exchange of Thailand.

The purchase will be made through the SCGP's wholly-owned subsidiary and further transaction details will be provided in the middle of this year.

SCGP chief executive Wichan Jitpukdee said SCGP has constantly increased investment in Vietnam, which has yielded a revenue growth of more than 10 percent annually.

"SCGP is prepared to work with all partners to share experience and knowledge in the development of integrated packaging solutions and support the growing demand for diverse types of packaging among customers in ASEAN," Wichan was quoted by the Bangkok Post as saying.

Duy Tan operates business-to-business sales to multinational companies and local brand owners of consumer and fast-moving consumer goods. The company also manufactures household plastic containers under the brand name "Duy Tan," with a capacity of 116,000 tonnes per year, the paper said.

The 10 billion baht is part of 20-billion-baht investment budget the SCGP announced last month for business expansion and merger and acquisition plans.

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SCG Packaging is one of the leading packaging businesses in Thailand. Photo: Komchadluek

Earlier in 2009, the SCGP established Vina Kraft Paper in the Vietnamese southern province of Binh Duong to produce packaging paper, with total production capacity of 500,000 tonnes per year.

In 2015 the company invested in the Tin Thanh Packing Joint Stock Company (BATICO), one of the five largest flexible packaging producers in Vietnam.;

The company also acquired 94.11 percent stake in the Bien Hoa Packaging Joint Stock Company (SOVI), a producer of corrugated paper and offset laminated packaging in Vietnam, with an annual total capacity of 100,000 tonnes.

According to Wichan, all three projects expand SCGP's production base for downstream products in Vietnam and are expected to contribute sales of an additional 8.5 billion baht per year.

The SCGP is also seeking opportunities for business expansion in paper production capacity in northern Vietnam to serve demand within the country.

Thai investment in Vietnam increases

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A power plant owned by Gulf Energy Development PLC in Thailand. Photo: gulf.co.th

Data from the Vietnamese Ministry of Planning and Investment showed that Thailand had 40 new registered projects, 23 projects registering for capital adjustment and 100 capital contribution and share purchases in Vietnam with total registered capital of nearly US$1.8 billion last year.

This number was more than double compared to 2019 and nearly seven times compared to the 2015-20 period.

Thailand currently is one of the nine largest investors in Vietnam with a total accumulated investment capital of $12.8 billion by the end of last year, equivalent to 603 projects.

Thai investors are interested in diverse fields in Vietnam, mainly processing and manufacturing, clean energy and real estate.

Talking to Cong Thuong (Trade and Industry) newspaper, Pannakarn Jiamsuchon, Thai Trade Counsellor to Vietnam, said that in addition to the constantly improving investment environment, Vietnam's participation in many free trade agreements (FTAs) was highly appreciated by Thai businesses and they were very interested in expanding investment in the country.

Thai investors in Vietnam also wanted to expand their investment, while new investors were also interested in seeking investment opportunities in Vietnam so that they could benefit from the FTAs.

The strategic partnership between Vietnam and Thailand is developing strongly and comprehensively in all fields, especially economic, trade and investment co-operation.

In the context of the COVID-19 pandemic, Thai investors are increasing their investment, merger and acquisition activities in Vietnam.

Gulf Energy Development PLC, a leading Thai private power producer, recently announced plans to acquire 70.5 per cent of Global Mind Investment Management (GMIM)’s shares from Nech Opportunities Fund VCC, worth US$40 million (Bt1.2 billion) to expand investment in Vietnam, Viet Nam News said./.

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