Government Prioritization to Enhance the Vietnam Chemical Industry Outlook : Ken Research
Ken Research announced its latest publication on, Vietnam Chemicals Report 2015 offer insights on the changing trends and key issues within the Vietnam
Chemical Industry. The publication includes an insightful analysis of production-consumption
behavior, export-import & technological scenario, leading players and regulatory
framework & related trade agreements within Vietnam Chemical Industry. The
analysis of the aforementioned trends has been done across eight product
categories within the industry: Fertilizer and Nitrogen, Detergent, Pants and
Printing Ink, Synthetic Rubber and Polymer, Plant Protection Chemical, Basic
Chemical, Synthetic Fibres and Other.
Economic Environment of Vietnam
Vietnam
is one of the most outperforming economies in the Southeast Asia. As per the
World Bank, “Vietnam is a development success story”. Gradually the economy of
Vietnam has transformed into a more liberalized and market-oriented one, while boosting
its integration with the global economy by entering into FTA with EEU & EU,
among other steps taken. Under the environment of communist dictatorship, the economic
liberalization started in 1986 with the ‘doi moi’ reforms which included
privatization & reduction of state control enterprises, opening up of the
trade and easing of investment policies, along with rejuvenation of the
financial sector. Vietnam is also a party in the Trans-Pacific Partnership,
which will lead to further economic liberalization.
Looking
at the current macroeconomic scenario in Vietnam, in 2016, the country is home
to 90.6 million people. Its GDP has been one of the fastest growing one since
1990. With 6% GDP growth rate and USD 510.7 Billion GDP (PPP), it has a global
ranking of 131st and regional ranking of 27th in the
Asia-Pacific region. Agriculture, Tourism industry and exports are the main
contributors to the GDP growth. Domestic consumption and investment has
expanded with increasing rates over the last two years. Looking at the foreign
investment, the influx is limited since the economic activities are largely
state-owned where govt. shields foreign investment, even restricting it in some
sectors of the economy. Currently FDI inflows amount to 9.2 billion USD.Persistent
inflation is also a disincentive to long-term investment. Exports and imports
have performed miraculously with both amounting to approx. 160 billion USD in
2015. Despite this success story of liberalization, lack of democratic
governance and state-owned enterprises continues to be a major challenge to the
economic growth of the country.
Brief Overview of the Vietnam Chemical
Industry
Chemical
industry, globally, is considered as one of the most crucial economic sector,
important to the development and expansion of other industries and hence for
the growth of the overall economy. Recognizing the industry as key contributor
to the economic growth, the govt. of Vietnam, as a most recent step towards it,
has also planned for developmental strategies and objectives for the emerging Vietnam
Chemical Industry via Decision 207/2005/QD-TTg, with a look towards 2020.Under
this decision, special attention is given to the main domains such as
fertilizer, common and special-use rubber, base chemicals (including both
organic and inorganic chemicals), petro-chemistry, pure chemicals,
pharmaceutical chemistry, and consumer chemicals to meet global and domestic
demand. The plan also aims at the development and use of advanced technology for
producing better quality chemicals at low costs and to reduce its adverse
impacts on the environment.
Looking
at the current landscape, the Vietnam Chemical Industry is in its infancy
stage. Although it is exhibiting strong growth performance with 19.25% growth
rate in 2010-14, still, being an infant industry, the domestic demand is not
met and hence heavy chemical imports have to be made. Among various imports
made to the country, Chemicals are ranked 11th with a revenue of 1.94 billion
US dollars. A categorical look at the product market implies: Fertilizers &
Nitrogen contributes the highest (30%) in the industry’s revenue, followed by
Detergents, while synthetic fibres contribute little to it. Fertilizers and
Detergents are high growth rates category while Plant Protection Chemicals have
shown slowdown in both volume & value terms. The growth of the industry can
be accounted to the increased demand and govt. priority to it. Also, the
industry suffers from weaknesses such as inability to supply input materials
and inferior technology machinery systems, among others.Sector-specific risks,
especially risk of safety in use and risk of environmental pollution also
challenges the growth of the industry. This ultimately leads to increased
investment due to increased spending on labor protection, fire prevention as
well as water treatment systems, creating barriers to entry and hence medium
level of competitiveness in the industry. Despite these challenges, the
industry faces full opportunities to growth on account of govt. development
plan, increasing integration with the global chemical market, urbanization and population
growth leading to increased demand for chemicals.
Major Market Players in the Vietnam
Chemical Industry
High
investment cost has kept the competitiveness at medium level in the Vietnam
Chemical Industry. Domestic producers run small and medium scale operation; and
faces intense competition from multinational corporations having financial
strength, advance technological as well as better marketing strategies. In
product categories such as Detergents, Plant Protection Chemical and etc.,
multinational corporations almost dominate the domestic market. Domestic producers
mainly process for multinational corporations and find niche markets to
survive.
Some
of the leading market players include: PetroVietnam Ca Mau Fertilizer JSC
(DCM), Petrovietnam Fertilzer and Chemicals Corporation (DPM), Lam Thao
Superphosphate Fertilizer and Chemicals JSC (LAS), Southern Basic Chemicals
JSC, LIX Detergent JSC (LIX), Dry Cell & Storage Battery Joint Stock
Company (PAC), Saigon Plan Protection JSC (SPC), Duc Giang Chemical and
Detergent JSC (DGC), Vietnam Fumigation Groups (VFG), Binh Dien Fertilizer JSC
(BFC). Foreign-invested companies such as Lever Vietnam and P&G also
have presence in the industry. In 2014, Petro Vietnam Fertilizer and Chemicals
Corporation (DPM) overtook other market players in terms of gross profit margin
(25%), followed by Petro Vietnam Ca Mau Fertilizer JSC (DCM); however, from
shareholders’ point of view, the market was dominated by Binh Dien Fertilizer
JSC (BFC) with 38% Return of Equity (ROE).
Vietnam Chemical Industry Prospects
Although
the Vietnam Chemical Industry is in its infant stage, the strong growth
performance of the industry in recent years, paints a promising picture for the
future of the industry. The industry is expected to witness substantial growth
in coming years as well, even ahead of the GDP growth rates. With more and more
liberalization of the economy and lowering of investment cost on account of
advance technology, the industry is expected to see more foreign as well as domestic
producers entering the chemical industry.
Key factors driving future growth of
Vietnam Chemical Industry:
·
government development plan
·
increasing integration with the global
chemical market
·
urbanization and population growth
leading to increased demand for chemicals
·
WTO membership & FTA with several
regions including EU
·
Cooperation with Japan & UNDP
Hence,
through strategically dealing with the challenges and weaknesses of the
industry along with exploiting potential growth opportunities, the Vietnam Chemical
Industry can contribute to sustainable economic development of the country.
Key Topics Covered in the Report
·
Detailed profile Global, Regional
& Vietnam Chemical Industry
·
Overall and category wise production
& consumption analysis of Vietnam Chemical Industry
·
Export-Import scenario and technology
analysis within each product category
·
Comprehensive overview
of the current business environment
·
Competitive landscape
of the Vietnam Chemical Industry
·
Regulatory framework applicable to the
Vietnam Chemical Industry
·
Forecasts about global
and domestic chemical industry.
To know more
on coverage, click on the link below:
Related Reports:
Contact:
Ken Research
Ankur Gupta, Head Marketing &
Communications
+91-124-4230204
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