Workers make plastic toy. Plastic companies are suggested to enhance their financial statements to attract investment. — VNA/VNS Photo Kim Phương

HCM CITY – Merely producing eco-friendly products is insufficient as plastic companies must enhance their financial statements to attract investment, experts suggested.

With growth of about 12-15 per cent per year over the past five years, the plastic industry in Việt Nam continues to draw interest from foreign investors with many of them seeking M&A opportunities in the sector.

Despite the growth, plastic exports have faced many difficulties.

A report from the General Department of Vietnam Customs said that Việt Nam plastic exports in the first nine months of 2023 reached US$3.7 billion, falling by 12.2 per cent year on year. In September, the export turnover was over $416 million, presenting a decline of 10.8 per cent month to month and a growth of 8 per cent year on year.

Hồ Đức Lam, chairman of Vietnam Plastics Association, attributed the plastic export reduction to a global economic slowdown.

In the last months of 2023, Lam said, the world economy had not prospered as much as expected. The challenge caused a decline in plastic consumption in foreign markets.

To boost exports and seek new partners, experts have warned that green production is an indispensable trend.

Experts and reports from researchers have all commented that ESG is a mandatory trend. If businesses do not follow this trend, they cannot improve their competitiveness, especially when businesses around the world are changing their thinking from “brown” to “green”.

In Việt Nam, the Government has decided to apply Extended Producer Responsibility (EPR) for packaging plastic products from 2024. This is an action to strengthen recycling and reduce plastic pollution.

Plastic companies around the country also have their own plans to develop green production.

In addition to green production and ESG, companies are currently prioritising more green investment to enhance their competitiveness.

In a discussion themed “The Significance of Financial Stability in Attracting Investment and Fostering Business Growth within HCM City’s Plastic Sector” in HCM City late last week, experts affirmed that Việt Nam’s plastic industry was actively exploring diverse sustainable financing options to meet its sustainability objectives.

Along with green production development, many enterprises were actively addressing potential liquidity challenges through in-house retention and customer credit risk management, often in collaboration with financial institutions.

“One of the key growth factors we’ve worked out with our member companies for the next few years is to acquire more green investment to enhance their competitiveness and attract more orders. At the same time, we understand plastic businesses will need to focus on presenting more comprehensive and transparent data necessary for investors to evaluate their business performances in order to access these green resources,” said Chung Tấn Cường, chairman of Vietnam Saigon Plastic Association.

Cường stressed that in addition to green production, companies must enhance their financial statements to attract investment.

To avoid risk and ensure stable credit, trade credit insurance is recommended as a “shield” for companies because it is a method for protecting a business against its commercial customers’ inability to pay for products or services, whether because of bankruptcy, insolvency, or political upheaval in countries where the trade partner operates.

An insurer from the Netherlands, Atradius, said that trade credit insurance helped businesses mitigate risks and ensure financial stability.

Discussing an example of the importance of trade credit insurance, a representative of the company said that a company last year faced a case in which the partner was facing bankruptcy. Luckily, the trade credit insurance provider helped them find out the truth and avoid loss.

Vũ Thị Đức Hạnh, country manager of Atradius in Việt Nam, said that in addition to providing a shield for the company, the insurer would help companies check the profile of their counterparts.

According to Hạnh, the insurer can also provide insights into payment practices, cash flow management, and liquidity solutions, enabling plastic businesses to adopt strong credit risk management strategies, especially when considering and working with new customers.

“We often refer to trade credit insurance as a "shield" that helps a business's sales team confidently sell to their clients. With trade credit insurance, plastic businesses will be able to minimise trade risk and foster sustainable growth. Moreover, trade credit insurance can enhance a company's creditworthiness, making it easier to secure financing, including green loans,” said Hạnh.

Sharing the same point of view, Hoàng Minh Anh Tú, chairman of Âu Lạc Plastic Company, said that companies in foreign countries, especially China, had bought credit insurance for a long time, which had facilitated easy and quick trade deals.

Tú also shared that his company years ago lost two containers of products overseas. Without insurance, his company lost a lot of money. -- VNS