Apr 15, 2009

Bioplastics expected to grow over 125 per cent in South East Asia

plastemart.com - Mumbai,Maharashtra,India

The bioplastics market in Southeast Asia is in its nascent stage and in the preliminary development phase. The large population in this region provides an impetus to producers to explore opportunities here. Producers are encouraged by the huge market potential of the region, which primarily stems from the market's novelty and current low penetration in target applications. The market is expected to grow at a compounded annual growth rate of 129.8% in the next 5-7 years until 2015 as per a report by Frost & Sullivan.

Increasing prices of conventional resins leading to increased polymer prices is likely to pave the way for the greater usage of bioplastics globally. Lack of local production as well as the low levels of consumption and public awareness are the major barriers to the greater usage of bioplastics in SE Asia. This is likely to change as more companies set up manufacturing plants in the region. Bioplastics will gain further attraction if market participants can educate consumers of its benefits. At present, bioplastics is perceived as a niche market, beset by cost and performance issues in Southeast Asia. These concerns have to be addressed before market participants progress. Bioplastic companies will have to be aware that consumers here are more cost conscious than their western counterparts, and therefore, may not be willing to pay a premium for the product. However, growing sensitivity to climate changes and a rise in oil prices have worked together to encourage the public, governments and private companies to evoke greater interest in bioplastics. The bioplastics market in this region is likely to find the going good with favorable local government support and initiatives, increasing competitiveness of bioplastics due to increase in oil price and the market recognition of bioplastics as a green product. Although the replacement rates of traditional plastics such as polyethylene (PE) or polystyrene (PS) with bioplastics are likely to be minimal, it will be a huge leap for the novel bioplastics market, and will count as high growth.

Moreover, the efforts of governments, especially those in Thailand, to derive 5% of their plastics from bio-based sources in 2012 have given a huge boost to the market. The governments are also looking to attract domestic and international businesses by introducing an incentive program that includes research funding and favorable tax policies.

With the country's abundant agricultural sector and large lactic acid (LA) manufacturing base, the Thai government is taking steps towards making Thailand a regional bioplastic hub. Although Thailand is currently the Asia Pacific's third largest bioplastic producer, ranked behind Japan and China, a combination of the country's natural resources, infrastructure and government support are expected to push the country's bioplastic industry forward to become a regional hub for bioplastics manufacturing and export. With an annual production of 20 mln tons, Thailand is the world's top exporter of cassava. Thailand has a large manufacturing base for lactic acid, derived from cassava and sugarcane starch which it broken down with enzymes into glucose and fermented to make Lactic acid, and later polymerized and converted into polylactic acid (PLA) resin. The Thai government launched the implementation of a 15-year three-phase strategy in 2006 to encourage the bioplastics sector to become a regional leader in the bioplastic industry by 2021.

The first phase is feasibility, during which imports of bioplastic material are entitled to favourable tariff relief. The second is the development of a local bioplastic industry using imports. Eventually, bioplastics imports should be replaced with locally produced materials from Thailand 's abundant crops of cassava and sugar. This is the third phase of the strategy, aimed at building a competitive global market for Thai bioplastics. Currently, Thai bioplastics have already started to be exported to markets such as the US, European Union and Japan.

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