More Golden Opportunities for Vietnam Construction Materials Industry

Mr Ly Quoc Hung, Director of Africa, West and South Asia Markets Department announced that the development of the Middle East and Africa construction market is a golden opportunity for Vietnamese construction materials enterprises.

 

Particularly, in the Middle East, construction is one of the booming industries. Thanks to foreign currency revenues from oil and gas industry, Middle East countries are accelerating the investment in infrastructure construction. Currently, the construction growth in the Middle East has surpassed production capacity in the region in terms of quantity, quality, technology and diversification of construction materials. Besides, regional construction development has led to expansionary demand for machineries, furniture, interior decorative equipment, textile and bathroom accessories. It is expected that the Gulf Cooperation Committee (GCC) of Arabs will spend US$915 billion for construction projects in two years (2012 - 2013). Meanwhile, 59 percent of underway construction projects in Middle East region and 75 percent of that in GCC come from Arab Saudi and the United Arab Emirates (UAE). Furthermore, with domestic capacity, Middle East countries can only produce super-lightweight cement products, helping reduce construction cost from 40 percent to 30 percent. Therefore, it is a positive sign for construction materials companies, especially cements to export to this region.

 

Along with the Middle East, Africa is also a relatively open market for Vietnam construction materials because its construction materials industry is quite under-developed and largely depends on imports; meanwhile domestic cement production only satisfies 51 percent of demand. This region also imports roofing materials, ceramic tiles, sanitary ceramic, water pipes, doors, pre-engineered steel building frame and other materials for construction industry. For example, Nigeria annually imports about US$4.2 billion of construction materials; or Algeria annually imports nearly US$2.3 billion.

 

Similarly, West Africa region is also in a serious shortage of cements with its demand growth rate of 12 percent annually. Mr Hung said that West Africa has recently imported cements from China and Turkey, but these two suppliers are showing signs of being boycotted. The reason is that despite cheap prices, Chinese cement is of low-quality; meanwhile, although the quality of Turkish cement is considerably stable, its price is quite high. Practically, opportunity for Vietnamese enterprises to push cement export to West Africa becomes increasingly greater.

 

According to Mr Pham Van Bac, Deputy Director of the Construction Material Department, if almost 10 years ago, Vietnam had to import various types of construction materials. Till now, the capacity of producing several construction materials such as various types of tile, construction glass and cementhas fully met domestic demand. Therefore, export has become a strategic direction of this sector. In 2011, revenues of Vietnam’s construction materials export reached its peak of US$765.9 million, up 86.4 percent over the year of 2010. Because total value of construction projects in the Middle East and Africa has rapidly increased, contracts to supply construction materials and furniture products for these markets has become extremely attractive to providers all over the world, especially enterprises in Vietnam.

 

However, experts also warn that payment capacity in the Middle East and Africa is still limited, and trade fraud happens quite frequently. Therefore, enterprises should be careful to avoid being cheated. In order to reduce risks when trading with partners from the Middle East and Africa, enterprises can consider selling at a lower price but with more secured payment methods.