Construction Industry Asia Forecast: Vietnam Review

Pasir Panjang Terminal Building, Singapore, May 6, 2015 (Newswire.com) - Vietnam has transformed from one of the poorest country in the world to being one of the world’s lower middle-income country in less than three decades. The country has already met 5 of its 20 millennium development goals. This year, the country is focusing on focusing on its infrastructures to continue growing and developing. Axis Capital Group, a construction company based in Singapore which sells and rents capital construction equipments in Jakarta, Indonesia, Vietnam and other developing countries in Asia has witnessed the growth and big leap of the country in its construction industry.

According to reviews, in 2013, when the country’s economy grew by 5%, its construction spending also grew by 6.68%. With improved credit facilities, the Residential Construction with the help of international construction assistance is expected to drive the construction market in Vietnam during the coming years.

The construction industry market in Vietnam is dominated by the low-cost and affordable housing sector. With the sustained growth of the country’s economy over the years, the purchasing power of the population has increased, particularly of the middle class population. This has created demand for affordable housing in the country.

The government of Vietnam is also focusing on providing housing facilities to the low-income groups. The gap between the demand and supply of energy in Vietnam has led to construction companies focusing on energy-efficient practices in building construction. Features such as rainwater harvesting and renewable – energy – powered water- heating systems are being extensively implemented in both and new construction projects.

While other sectors of the economy like agriculture, manufacturing and services are struggling to stay afloat; the industry has achieved positive growth thanks to the Government's economic stimulus measures, lower interest rates and failing prices of building materials.

Figures from the Ministry of Construction show that the industry achieved a year-on-year growth rate of 5.4% in the first half of this year. In its report at the mid-term Consultative Group Meeting in June, the World Bank forecast that the industry could achieve double-digit growth this year.

Over the long term, the construction industry has much room for growth thanks to the big complaints and demands for infrastructure and housing development. In the transport sector, Vietnam plans to develop as expressway system from the North to the South, deepwater seaports in Haiphong, Khanh Hoa and Ba Ria-Vung Tau and a big international airport in Dong Nai. In the energy sector, many hydropower projects will be built between now and 2020 to meet the increasing power demand. In the tourism sector, more luxury hotels will be developed to accommodate international visitors. Tourism authorities have estimated that Hanoi will need additional 13,000 rooms of three to five star standard and HCM 7,000 rooms by 2020. In the housing sector, the Government has approved an urban upgrading program to 2020 with total investment amounting to VND175 trillion, aiming to upgrade cities from grade four up, housing areas of low-income people and urban centers with poor technical infrastructure. Meanwhile, people also want to upgrade or build homes.