Vietnam’s construction market forecast to lure more investors – more than half of construction roles are awarded to foreign contractors
According to analysts from the UK-based financial data and research group, more than half of construction roles are awarded to foreign contractors, reflecting the openness of Vietnam’s construction market. Foreign participation is mainly represented by South Korea, Japanese and Chinese engineering companies
More foreign participation is forecast in Vietnam’s construction market over the coming years, buoyed by the gradual opening up of the Vietnamese economy to foreign investors and the government’s emphasis on infrastructure development.
The information was included in a recent report by Fitch Solutions on the outlook for Vietnam’s construction and infrastructure sector.
According to analysts from the UK-based financial data and research group, more than half of construction roles are awarded to foreign contractors, reflecting the openness of Vietnam’s construction market.
Foreign participation is mainly represented by South Korea, Japanese and Chinese engineering companies. Japanese financiers are particularly active there, highlighting their dominance as an important exporter of infrastructure.
“When analysing the mix of nationalities of companies operating in Vietnam’s burgeoning construction and infrastructure market, we note that the country has one of the most diverse competitive landscapes within the South-East Asian region, ” the analysts noted.
According to Fitch, opportunities for foreign companies to participate in Vietnam’s construction market exist mainly in areas where private or foreign companies have competitive advantages. These areas include designing, consulting, building and managing projects, especially projects that are more technically challenging, and supplying high-value industrial goods such as rolling stock and wind turbines.
Based on data from Fitch’s proprietary Infrastructure Key Projects Database (KPD), local Vietnamese companies unsurprisingly dominate the construction scene, holding 43% of construction roles awarded. The proportion of local dominance is lower compared to its regional peers – in Indonesia, local companies hold 65% of market share, Thai companies hold 56% in Thailand, and Malaysian companies hold 62% in Malaysia. Only the Philippines has a lower share of domestic dominance than Vietnam at 34%.
Major domestic players include joint-stock company Civil Engineering Construction Corporation, LILAMA Vietnam Machine Installation Corporation and Vinaconex.
The majority of roles are awarded to foreign companies, reflecting the openness of Vietnam’s construction market. Fifty seven per cent of all contractor roles are awarded to foreign companies, with three nationalities dominating. These foreign players are essential to the development of Vietnam’s infrastructure sector, as they bring with them technology, expertise in project management and construction methods.
“The enactment of the Public-Private Partnership (PPP) Law in 2020 signals the government’s intention to attract more private sector investment in the infrastructure sector, and we believe foreign players will play an increasingly important role over the next decade, ” Fitch said.
Leading the foreign nationalities in construction roles are South Korean companies with 17% of market share, represented by established brands such as GS E&C, Doosan Heavy Industries & Construction and Posco E&C.
Japanese companies hold 14% of market share and are mainly involved in infrastructure projects in the transportation and water sectors while Chinese companies currently hold approximately 10% of the market share. — ANN/VNS
Source: https://www.thestar.com.my/business/business-news/2020/08/31/vietnams-construction-market-forecast-to-lure-more-investors
