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PRESENTING BY: MUHAMMAD TALHA AHMED (SP06-BB-0017) MUHAMMAD OZAIR AMIN (SP06-BB-0061)
PLASTIC INDUSTRY IS A MOTHER OF ALL OTHER INDUSTRIES.
• • • • • • • • • • Definition Of Plastic Introduction History Global Overview Industry Overview Types Of Plastics Raw Materials Plastic Processing Consumption Of Plastics Plastics Units
• • • • • • • • • • Duties & Taxes Export Potential Recycling Scrap End Users Interest Group Support Service Institution Environmental Hazards SWOT Analysis Problems Suggestion
DEFINITION OF PLASTIC
• A plastic is a type of synthetic or man-made polymer; similar in many ways to natural resins found in trees and other plants. • Webster's Dictionary defines polymers as: “any of various complex organic compounds produced by polymerization, capable of being molded, extruded, cast into various shapes and films, or drawn into filaments and then used as textile fibers”. • Plastics are used because they are: •Attractive •Hard •Soft & Rubbery •Easy To Clean •Light Weight •Hygienic •Easy To Shape & Color •Economical •Flexible
• In this modern era a world without plastics is unimaginable. • Plastics can be made to resemble and replace such diverse materials as metal, wood, glass, stone, cloth, rubber, cardboard and leather etc. • It is used in manufacturing automobiles, television, refrigerators, electrical goods, furniture, house-ware, defense products, etc. • The plastic industry of Pakistan has seen a remarkable average annual growth rate of around 15 per cent during the last four years against a global average of 8 per cent despite severe technical and institutional impediments.
• 1953 - First plastics and polymer research center created with the establishment of Pakistan Council of Scientific and Industrial Research (PCSIR) in Karachi. Plastics resin is sold for Rs.3.05 per pound in local markets. • 1963 - Average prices of plastics resin move up only 90 Paisas in ten years. Exports Promotion Bureau is created. • 1966 - Arkoy Chemical Industries becomes the first unit in Pakistan to manufacture PVC pipes. • 1967 - Famous brand of PVC pipes "Galco" is introduced in local markets. • 1971- Government begins to compile statistics of imports. Plastics raw materials imports are recorded at 30.7 million rupees.
• 1973 - 120% increase is recorded in the prices of plastics resins in 20 years. Plastics products worth 0.465 million are exported for the first time. • 1980 - Pakistan Plastics Manufacturers Association is formed. The association is registered with the Ministry of Commerce in the month of May. • 1982- Poly Industries sets up a cast acrylic and polystyrene sheet plant at Hub, Lasbella, some 35 km west of Karachi. • In 1988,Plastics Technology Center (PTC) was established by FCCCL (The Federal Chemicals & Ceramics Cooperation Limited), in Karachi. With the inauguration of the centre in October, polymer sciences education begins in Pakistan, which later on provides highly qualified and skilled manpower to the plastics industry.
• With a global annual average growth rate of around 7.5 per cent, consumption of all types of polymers has increased from 8 million tons in 1960 to around 180 million tons in 2003. • The South East Asian countries have registered fastest growth of 15 per cent and are expected to continue growing at much higher rate in future. • Production of major plastics raw materials like Polyethylene (PE), Polypropylene (PP), Polyvinyl Chloride (PVC) and Polystyrene (PS) is a capital-intensive activity and is thus confined to large scale manufacturing sector. • The downstream plastic processing industry is mostly concentrated in the small-scale sector owing to high labor to capital ratio.
GLOBAL OVERVIEW (CONT..)
• Such industries are ideally suited for creating employment opportunities. According to an estimate, 5 workers are required for processing 10 tons of plastics. • Plastics consumption has traditionally been the highest in USA, Europe and Japan amounting to 75% of global consumption. • Consumption in China, Taiwan, Korea, Thailand, Malaysia and India has increased manifold during the last few years.
PER CAPITA CONSUMPTION OF PLASTICS
Pakistan India China World
Kg. Kg. Kg. Kg.
3.1 3.3 7.0 17
• The Pakistan Plastic industry comprises of an up-stream organized segment having 7 units. • A down-stream segment dominated by a large informal sector of over 5,000 units & the down-stream plastic processing industry also comprises of an estimated 700 organized units. • Total investment made by the large-scale upstream plastic industry is around Rs. 5.677 billion. An estimated Rs 10 billion has been invested by the down-stream plastic industry of Pakistan. • The industry attracted investment amounting to more than US$ 260 billion, almost half of which was foreign direct investment (FDI).
INDUSTRY OVERVIEW (CONT..)
• Particular growth is being seen in exports of plastic components for the automobile industry. • The industry is contributing more than Rs7.5 billion annually to the national exchequer in shape of custom duty, sales tax and income tax. • Its contribution to the gross domestic product (GDP) was 1.69 per cent.
TYPES OF PLASTICS
• 1. 2. There are two types of plastic produces in Pakistan. Thermoplastics Thermosetting Plastics
• Plastics, which are capable of being repeatedly softened by heat and hardened by cooling, are called Thermoplastics. • Polyethylene (PE), Polyvinyl Chloride (PVC), Polystyrene (PS), Poly Propylene (PP), etc. fall in this category.
• These are plastics which when cured change into a substantially infusible or insoluble product. • These plastics are generally produced by addition polymerization. • This category includes phenol formaldehyde, urea formaldehyde, melamine formaldehyde, polyglycol, etc.
• Polyethylene (PE) • Polypropylene (PP) • Polystyrene (PS) • Polyvinyl Chloride (PVC)
• PE, the leading thermoplastic material, has established its usage in packaging film, household articles, automotive and industrial parts. • Valika Chemicals, Karachi was producing polyethylene in 1960s, which has since closed down. Now there is no plant producing polyethylene.
• PP is used in the form of woven bags, household articles, furniture and packaging film. • There is no plant producing polypropylene at present.
• PS is being consumed in electrical and electronic parts, household articles, automotive parts and packing material. • Pak Petrochemical Industries, Karachi is producing polystyrene from imported styrene. • This plant started production in 1987 with an initial capacity of 5,000 MTPY. The capacity has now reached 27,000 MTPY. • There are three grade of PS produced.
PRODUCTION, IMPORT & CONSUMPTION OF POLYSTYRENE (PS) (MILLION TONS)
1997-98 1998-99 1999-00 2000-01 2001-02 2004-05
1,470 1,302 1,017 11,627 16,394 36,000
IMPORT CONSUMPT ION
11,798 16,387 14,452 18,938 7,756 N.A 13,268 17,689 15,469 30,524 23,398 23,400
POLYVINYL CHLORIDE (PVC)
• PVC is used for doors, windows, pipes & fittings, profiles, food packaging, furniture, electronic components, foot-wear and cables. • Engro Asahi Polymer & Chemicals started its production in December 1999 at Port Qasim, Karachi. • It has an installed capacity of 100,000 MTPY & the project was completed at the cost of Rs 4.0 billion. • It has the capacity to produce 5 grades of PVC.
PRODUCTION,EXPORT & IMPORT OF POLYVINYL CHLORIDE (PVC) (MILLION TONS PER YEAR)
2000 2001 2002 2004
65,000 68,600 83,600 100,000
25,512 12,900 16,407 30,000
34,602 19,268 13,144 13,150
DEMAND & SUPPLY PROJECTION (000 MILLION TONS)
PRODUCTS CONSUMPTION 2001 - 2002 Polyethylene (PE) Poly Propylene (PP) Polyvinyl Chloride (PVC) Polystyrene (PS) Total 157.5 144 78 23.4 402.9 ESTIMATED DEMAND 2004 - 2005 235 150 95 35 515 2009 - 2010 340 205 120 45 710
PVC Polystyrene Unsaturated Polyester Resin (UPR) Alkyd Resin Total
83,600 16,394 4,140 1,644 105,778
MAJOR PLASTICS RAW MATERIAL MANUFACTURERS
BREAKDOWN OF PLASTICS MATERIAL WITH GROWTH
Plastics Poly Vinyl Chloride (PVC) Polyethylene (PE) Polypropylene (PP) End Use Industries Pipes, Artificial Leather, Cable Coating, Packaging, Footwear Film for Packaging, Bottles and Pipes Woven Bags, Auto Parts, Packaging, Pipes House ware & Medical Applications & Pipes % Growth 10
27 17 6
Polystyrene (PS) House & Sanitary Wares, Auto Parts, Electrical Parts
• There are several different processing methods used to make plastic products.
CONSUMPTION OF PLASTIC
DESCRIPTION Total Available For Consumption Local Production (Estd.) Total Import (Actual) CONSUMPTION (M.T) 711,787 100,000 611,787
PROVINCE WICE PLASTIC UNITS
Balochistan 3% NWFP 7% Sindh 30%
CITY WISE PLASTIC UNITS
45% 40% 35% 30% 25% 20% 15% 10% 5% 0%
ho re hi a ba d ra nw al K ar ac ul ta oo n Q ue H at sa la G ad La M O th er s ta r tta n
25% Series1 12% 7% 8% 4% 3% 3% 3%
MANPOWER ENGAGED WITH PLASTIC UNITS
MANPOWER ENGAGED WITH PLASTIC INDUSTRY
18,000, 3% 42,000, 7% 180,000, 30% 360,000, 60% PUNJAB SINDH NWFP BALOCHISTAN
DUTIES & TAXES
• Plastics sector remains one of the major contributors in terms of the amount of duty and taxes paid to the Government. • During the last two decades, import duties have been gradually reduced from 105 percent to 10 percent on major plastics materials.
DUTIES & TAXES
DUTIES & TAXES Custom Duty (All Plastics) Polyethylene High Impact Polystyrene Pet Material Sales Tax Income Tax on Imports % 5% 5% 5% 10% 15% 1%
• 1. 2. The potential of export in two sectors. Plastic Materials Finished Goods
A. PLASTIC MATERIALS
• PVC: Pakistan has become a plastics material exporting country. • In the year 2000, export of PVC has been 12,000 m. tons worth $ 8 million and the unit was expecting to increase export to 30,000 m. tons. • The product exported to the countries: Sri Lanka, Bangladesh, UAE, China, Hong Kong, Vietnam and Nigeria.
A. PLASTIC MATERIALS (CONT)
• PS: Polystyrene is being produced by Pak Petrochemical Industry. • 50 percent of the production is being exported to Bangladesh, Sri Lanka and Nepal.
B. FINISHED GOODS
YEAR QUANTITY (MILLION TONS) 1996-97 1997-98 1998-99 1999-00 2003-04 2004-05 4,873 12,325 6,780 11,035 N.A. N.A. VALUE (MILLION RS.) 238 600 443 686 33.4* 111.5*
RECYCLING / SCRAP
• Plastics scrap recycling has developed into an industry in Pakistan. • About 400 known units are engaged in recycling of Plastics scrap. • Presently Plastics waste is not being imported.
PROCESS OF RECYCLING
• 1. 2. 3. There are three process of recycling. Collection Of Scrap Process Stages Applications
PROCESS 1 COLLECTION OF SCRAP
• Household waste of broken unusable Plastics items. • Industrial Plastics waste • Plastics cans, container, etc. • Hospital waste such as disposables syringes, canolas, etc.
PROCESS 2 PROCESS STAGES
• Collection of scrap. • Sorting is done at site and also at the time of collection. • Cutting to reasonable processing size. • Washing. • Melting to form lumps. • Passing through cutter to have granules or into pieces
PROCESS 3 APPLICATIONS
• The recycled material is used for manufacturing of low cost and inferior quality products such as: • House holds utensils • • Sandals / Chappals Washers and seals for water supply fittings
• Other Plastics goods.
• A. B. C. D. E. F. G. H. I. J. The end-users of various categories of plastics processed goods are. Construction Consumer Goods Medical Products Automotive Electronics Other Appliances Packaging PP Woven Sacks Furniture & Fixture Paints, Paper & Textile
• There are two groups which are taking keen interest in Plastic Industry. Pakistan Plastic Manufacturers Association Lahore Chamber Of Commerce & Industry
1. PAKISTAN PLASTIC MANUFACTURERS ASSOCIATION
• The PPMA was established to safeguard the interests of Plastic Manufacturers in Pakistan in 1980s. • The main objectives were to protect, promote, encourage and develop plastic processing industry in Pakistan and raise the production standards of its member enterprises. • The Association often holds certain seminars, trainings and Annual Exhibitions.
2. LAHORE CHAMBER OF COMMERCE & INDUSTRY
• Lahore Chamber is a premium institution providing different kinds of services to Plastic Industry. • These activities range from providing membership of the institution to holding different International Exhibitions. • Standing committee on Petro-Chemicals & Plastic meet once in a month to discuss issues and problems of the sector and then formulate proposals to be sent to the government or raised through the chamber platform.
• 1. 2.
There are two support service institution. Financial Institution Technical Institution
SUPPORT SERVICE INSTITUTION
1. FINANCIAL INSTITUTION
• Commercial banks and specialized Financial Institutes (SME Bank, PICIC, etc.) are individually linked to the industry. • The demand of the cluster has been on the increase for expansion and the finances are mostly required for working capital needs, longer term supply contracts and machinery leasing. • The Loan Repayment history of the cluster on the whole has been remarked as excellent.
2. TECHNICAL INSTITUTION
• A. B. Technical institution are also divided into two categories. Technical Education & Vocational Training Authority Plastic Injection Mold Technology Development Project
A. TECHNICAL EDUCATION & VOCATIONAL TRAINING AUTHORITY
• The Technical Education and Vocational Training Authority (TEVTA) is a significant endeavor of the Government of Punjab, which focuses on the development of human resource in terms of skill up gradation for men and women. • They also acquire skills whereby they can also set up their own small industrial or service establishments. • TEVTA has also ensured liaison with industry at all levels in terms of the technical training as well ensuring relevant curriculum to suit industrial needs. • Presently TEVTA and plastic Industry are not properly associated and the courses offered by the institute are outdated and requires updating the curriculum.
B. PLASTIC INJECTION MOLD TECHNOLOGY DEVELOPMENT PROJECT
• Government of Japan and Government of Pakistan joined hands to support Local Plastic industry and started this project. In the first phase the staff members were trained by Japanese experts in the injection molding technology. In the second phase the market demands were collected to formulate the services of the center. Three kinds of services are planned to be provided to the Plastic Products Industry; Training Courses & Seminars Backup Support Services Advisory services
• 1. 2. 3.
B. PLASTIC INJECTION MOLD TECHNOLOGY DEVELOPMENT PROJECT
• In the coming years this center will be highly productive and helpful with the available resources. • This center received a lot of demand for technical trainings and mold designing from the Lahore plastic products manufacturers.
• Plastic bags are an environmental hazard and their production and use need to be disallowed in the country. • Used plastic bags are found in abundance in the streets and are responsible for clogging drains and sewerage lines. • In the rural areas, these bags decrease the productivity of the arable land because they do not rot or turn into compost. The most dangerous are the black bags, made of recycled plastic which increases their toxic content.
ENVIRONMENTAL HAZARDS (CONT)
• Plastic's non-biodegradability poses serious environmental and health problems. In addition, the additives used in processing plastics results in the presence of substances that are a serious health hazard. • Burning the waste releases dioxin - a class of 75 chemicals - which is carcinogenic and causes birth defects and other serious ailments like cancer.
•Easy availability of cheap labor •Increasing domestic market having demands from both low-end and highend segments. •Several Large Units are also present. •Industrial Zones facilities are available. •Location is a competitive strength. •Acceptable as international Avenue for Exhibitions / Seminar / Foreign Buyers visit. •Sound Cash flows
•The industry is largely unorganized and scattered. • Professional management is not perceptible in the cluster. •The manufacturers are dependent on imported raw material from outside. •Lack of Research & Development efforts. •Lack of vision / Planning. •Traditional designs and no innovations. •Not getting benefits from support institutions. •Nominal Export. •Weak Association.
•Pakistan is emerging as a major consumer market and international demand is also on the rise for plastics. •Globalization and free trade. •Strong National Economic indicators working for benefit of Industry. • Linkages with BDS & Support service providers. • Product Marketing • New and innovative products.
•Globalization and free trade. •High custom duties on Raw Material •Local Market Penetration by regional competitors. •High Quality Standards.
• Sales Tax for the organized sector is 15 percent, whereas the unregistered buyers can get any amount of the Plastics materials by paying 16.5 percent sales tax. • Export Promotion Bureau needs to enhance its cooperation with the manufacturers in international exhibitions. • Lack of information on potential export markets is an impediment to export growth. • Interrupted power supply is not only affecting production but also damaging the expensive machines.
• Incentive for deletion is limited to a few components. • Lack of adequate training institutes. • PSI is not playing its due role for better quality control. • There are no export ware houses particularly for capturing South African market. • Lack of financial assistance. • Sales tax on import of moulds is not adjustable against output tax.
• Tariff on High Impact Polystyrene (HIPS) has been reduced to 10 percent from 25 percent that is hurting the local industry. • Intellectual property and copyright laws are not strictly enforced.
• Creation of a plastics desk in the Export Promotion Bureau (EPB). • Establishment of plastics website providing information on imports, exports, international associations, plastics processors in Pakistan. • Export ware-houses in target markets. • Holding national and international exhibitions. • EPB should ensure participation of genuine exporters.