1. Rapid urbanization has been a major catalyst for Vietnam Construction Chemical market revenue which is expected to get doubled by 2027F
By 2027F, the Vietnam construction chemicals market is expected to grow at a robust rate. The market’s expansion can be ascribed to rising urbanisation, increased expenditures in infrastructure and real estate construction projects, and the availability of cheap and abundant raw materials. Furthermore, the Vietnamese government aims to reduce greenhouse gas emissions by about ~8% by 2030 and is consistently focusing on eco-friendly and energy-efficient building development, thus the government has been promoting the use of green chemicals, which will further increase the demand for higher-quality building chemicals in the country in the coming years. The prominent companies in the Vietnam building chemicals market includes: Sika Limited (Vietnam), BASF Vietnam Co. Ltd., GCP Vietnam Company Limited, Mapei Vietnam Co. Ltd., and others.
2. Tenders from commercial and industrial sector, Government initiatives and high FDI inflows are acting as the major growth drivers for the Vietnam Construction Chemical market
Vietnam Construction Chemicals industry revenue stood at USD ~ Bn in 2022E and recorded a CAGR of 5.6% during 2017-2022E. Growth in Urbanization and Development of Housing Projects and Government initiatives has led to the growth for construction chemicals in Vietnam.
For instance, the Government has approved infrastructure projects like the construction of four airport in Sa Pa, Quang Tri, Lai Chau and Phan Thiet which are expected to kick off in the early 2023. More projects like Bac Tan Uyen Vietnam-Singapore Industrial Park III and Rach Mieu II Bridge are also in the pipeline. The government has also allocated US ~ $35 billion to its economic recovery plan for the 2022-2023 period in order to revive the economy from the Covid-19 impact. Furthermore, demand for high quality and durable products such as Admixtures for cements and waterproofing products have also contributed to the growth of chemical industry in Vietnam.
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3. With high level of Competition, Fluctuating Foreign exchange rate and Decreasing purchasing power are posed as the major challenges faced by the Vietnam Construction Chemical Market
Covid-19 pandemic has drastically affected the purchasing power of the people real estate market. For instance, individual investors were offering lower prices to customers for land and houses in Ho Chi Minh City by about 30%, while companies gave discounts of 40-50% to boost stagnant sales. But Covid-19 is not the challenge, Fluctuating Foreign exchange rate are also a major problem as most of the raw material for construction chemical is usually imported in Vietnam and fluctuating exchange rate is affecting the market with its price points. The State Bank of Vietnam is facing multiple pressures in 2022 in managing the foreign exchange rate. Furthermore, growing competition and poor government policies are also affecting the market. Like, Joint venture with a local partner to manufacture product or Sell product through local distributor is a common trend to enter the market. The market has a margin upto 30% and with the recent developments in construction market let to reduction in the margin, thus a posing a threat to new entrants.
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