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Mixed fortunes in Southeast Asia: Vietnam

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Read Part 2 here.

Vietnam slowly builds

Vietnam’s economy is slowly but steadily recovering after a few difficult years. Up until 2008, the country was expanding at above 8% per year and the cry went up: ’Here comes another tiger economy!’ The nation’s growth since 2012 has languished at under 6%. Various reports, including a recent one from Standard Charter, conclude that the worst is over and that the country is recovering through foreign direct investment (FDI). In the first 10 months of last year, registered FDI rose by 95.8% to US$13.1 billion while disbursed FDI rose 6.4% to US$9.6 billion. The country is well positioned to attract even more investors in the coming years. The report notes that many China-based manufacturing clients are considering relocating and investing in the Mekong region.

Many domestic construction material producers are giving priority to developing exports. For example, in December 2013, the Viet Nam News reported that by the end of that year the country’s cement exports were expected to reach 14 million t, the highest level ever recorded. Domestic consumption looked to be heading towards nearly 43 million t at the time of writing. One can look no further than Thailand’s Siam City Cement (SCC), a company that believes that Vietnam represents the key to expansion in Southeast Asia. In December 2012, the Thai group paid US$240 million for 85% of Prime Group, a leading building material producer. SCC’s President and CEO, Kan Trakulhoon, said, “Vietnam is an emerging economy with a large and dynamic population and a good business environment. The country has many favourable factors for our upcoming plans.”

On the other hand, the cement industry has been through a gloomy patch. Many cement producers are only operating at about 70% capacity and, as reported last year, several companies have suspended production. What will encourage the cement industry, in addition to increasing exports, is the prediction from at least one market analyst that Vietnam’s construction sector is in an upward cyclical phase that will continue through this year. Monetary conditions are expected to remain conducive for construction with increased investment, particularly from foreign sources.

In November 2013, the Vietnam Embassy issued a press release stating that a subsidiary of the Vietnam Machinery Installation Corporation was running trials on a new 2500 tpa clinker line at the Kampot cement plant in Cambodia. Of the total 7000 t of equipment and machinery installed at the factory, 1200 t was manufactured in Vietnam.

Read Part 4 here.

Written by Paul Maxwell-Cook. This is an abridged version of the full article, which appeared in the February 2014 issue of World Cement. Subscribers can view the full article by logging in.

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