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SCG Packaging invests US$353 million in Vietnam
Expansion allows Thai firm to pursue growth opportunities in country’s north, China’s south
Nguyen Tuong Thuy 23 Sep 2021

Thai firm SCG Packaging will invest 11.8 billion baht (about US$353 million) in its Vietnamese operations, which will include building a new packaging paper manufacturing complex in Vinh Phuc province that borders Hanoi in northern Vietnam.

The new complex will raise the total production capacity of the packaging paper maker, part of Thailand’s largest industrial conglomerate Siam Cement Group (SCG), to 870,000 tons per year, much higher than the current 500,000 tons.

“The investment is currently under Environmental Impact Assessment process,” says Wichan Jitpukdee, SCG Packaging’s CEO. “We expect the plan to be completed and commercial production to begin in early 2024.”

The demand for packaging paper and related packaging products in Vietnam is expected to increase by 6% to 7% per year during the 2021-2024 period, Wichan notes. “Vietnam has strong domestic consumption and is an important export base in the region, a big draw for multinational companies to invest their operations there,” he adds. “Our new investment in this production complex will allow us to pursue growth opportunities in the north of Vietnam and the south of China.”

The new complex will be run by Vina Kraft Paper, a 70-30 joint venture between SCG Packaging and Japan’s Rengo Company. Vina Kraft Paper was set up in 2009 in Binh Duong province next to Ho Chi Minh City, serving as the Thai firm’s production base in the south.

SCG, which is one of the leading Southeast Asian conglomerates and comprised three core businesses namely SCG Cement-Building Materials, SCG Chemicals and SCG Packaging, aims to capitalize on growing demand among Vietnam’s 98 million people for plastic packaging products.

This February, the Thai giant signed a deal to acquire a 70% stake in Duy Tan Plastics, Vietnam’s top producer of rigid plastic packaging products, for SCG Packaging. The acquisition is slated to take place in three years based on the seller’s business results. Therefore, the two sides did not reveal the deal value, but both are looking to creating a solid foundation for a completed supply chain.

In 2015, SCG Packaging started to invest in Tin Thanh Packing JSC, one of Vietnam’s five largest flexible packaging producers. Paying about US$89 million, it bought a 94% stake in the Bien Hoa Packaging JSC, a producer of corrugated paper and offset laminated packaging in Vietnam that can supply 100,000 tons of products annually.

In 2018, its parent group SCG took full ownership of the long-delayed Long Son petrochemical project, about two hours’ drive from Ho Chi Minh City, by buying out its local partner PetroVietnam in the US$5.4 billion complex. Spending US$90.2 million on the last 29% stake, SCG hopes the deal to help it as the sole owner push investment forward more flexibly, with the targeted commercial operations set to start by the first half of 2023.

In Vietnam, SCG also holds stakes in many major plastics and building materials companies, such as Binh Minh Plastics JSC, Vietnam Construction Materials JSC, Prime Group, Viet Thai Plastchem Joint Venture, TPC Vina Plastics and Chemicals, Vietnam Chemtech, and Minh Thai Plastic Materials.

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