Government Prioritization to Enhance the Vietnam Chemical Industry Outlook : Ken Research

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Government Prioritization to Enhance the Vietnam
Chemical Industry Outlook Ken Research
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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.
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• 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.

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• 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.

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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.
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A categorical look at the product market implies
Fertilizers Nitrogen contributes the highest
(30) in the industrys 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.
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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).
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Foreign-invested companies such as Lever Vietnam
and PG 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.
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• 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.

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• 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.

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