Vietnam Construction Equipment Market - Strategic Assessment & Forecast 2022-2028

MARKET OVERVIEW

The Vietnam construction market was valued at around USD 616 million in 2021, and the market is projected to register a growth rate of 5.88% during the forecast period (2021 -2028). The sales are projected to reach 6,869 units by 2028. The growth in construction equipment is majorly driven by the Government's surge in public infrastructure investment, growth in housing, and renewable energy projects.

KEY HIGHLIGHTS IN THE REPORT

• The material handling segment accounts for the largest Vietnam construction equipment market share. Due to the manufacturing and construction industry growth, forklift accounts for the largest market share in the material handling segment.
• The earthmoving segment is the second-largest second after material handling. Backhoe loaders are popular due to their extensive use in civil work and urban development projects in Ho Chi Minh City and Hanoi. Backhoe loaders provide flexible operation facilities on muddy and uneven terrain, making them more popular than excavators in the Vietnam earthmoving equipment segment.
• In 2022, the Government plan to $120 billion on public infrastructure. The construction industry is expected to grow by 6% in 2022 due to a rise in government investment in infrastructure & road construction projects. The country's real estate sectors witnessed 4% growth in 2021; similar growth is expected in 2022.
• The country's manufacturing sector grew by 6.3% in 2021; the industry benefited by shifting manufacturing bases from China to the country's northern region due to the availability of low business setup costs.
• The Government's shift to renewable energy resources is expected to prompt the investment and FDI inflow in the renewable energy sector in 2022.
• The demand for mini excavators and cranes is expected to grow due to the surge in solar and wind farm projects to achieve carbon-neutral status by 2050.

Investment in Infrastructure & Renewable Energy Sector Drives the Economic Recovery

Vietnam's economy was resilient and witnessed 2.9% growth in 2020. The country's manufacturing and export sectors performed well in 2020, which offset the negative impact of COVID-19. The government investment in Real Estate, Construction, Mining, Power, Information technology & Education sectors will improve economic activities across the country in 2021, resulting in a growth of 6.3% in the construction industry.

According to the IMF forecast, Vietnam's economy is expected to grow by 6.5% in 2022, making the country one of the fastest-growing economies in the Southeast Asian region. Government initiatives of tax reduction on importing raw materials and reducing land rental are expected to positively impact the country's manufacturing industry.

Vietnam ranked 70^th in ease of doing business in 2021. The country has a competitive edge over other Southeast Asian countries due to low cost business setting up compared to other countries such as Indonesia, Thailand & Malaysia because of the availability of low-cost labor and tax incentives provided by the Government. The country's electronics, textile, garments, and leather industries are booming due to a surge in demand.

In 2021, FDI inflow in Vietnam slightly declined by 1.2% due to a slow economic recovery. The second wave of infection hampered the economic recovery process in the country. However, Government is expecting a strong market recovery and high FDI inflow due to a surge in infrastructure in 2022. The initiatives of low corporate tax rates and exemption from tax for major industries such as garment, textile, telecommunication & electronics. Exemption of import duties on raw materials and reduction of land rental is expected to attract FDI in 2022.

According to government data, the country plans to invest $480 billion by 2030 to upgrade infrastructure, including 11 power plants, new highways, and roadways. In 2021, the Ministry of Transport Vietnam drafted a road & highways construction plan. The department aimed to connect all highways to main political centers, key economic regions, seaports, and international airports. In addition to it, ~5,000 kilometers of highway construction were planned.

The Government planned to invest ~65 billion in road infrastructure by 2030. 48% of total transport industry investment is planned for road network development by 2030. Major road construction projects such as North-South Express ($18.5 billion), The long Thanh Airport ($16 billion), Ho Chi Minh City Metro ($6.2 billion), Hanoi Ring Road ($368 million), Hai Van Tunnel 2 ($312 million) & Lien Chieu Port Da Nang ($147 million) are under progress in 2022.

A surge in Investment in Public Infrastructure, Real estate & Renewable energy Projects

According to Asian Development Bank, Vietnam will invest ~5.7% of its GDP in infrastructure development in 2022. The Vietnamese Government is increasing public investment by 8.3% in 2022. An investment of $22.7 billion is planned for construction projects, including $1.5 billion from foreign sources. In 2022, the project funding will be more concentrated on enhancing transport infrastructure in the country.

Growth in Housing Projects in Bao Loc, Dalat & Ho Tram Regions

In 2022, the industry recovered, and demand for housing in the suburbs region to avoid city pollution & population has increased. So, the growth in demand for housing in Bao Loc, Dalat, and Ho Tram is witnessed, especially after the pandemic. FDI inflow in the country's real estate industry accounted for 11% of total FDI inflows in 2021. The government initiatives of loosening the housing laws under the national housing development plan 2021-2030 are expected to support the country's housing demand.

Vietnam is one of the fasted growing economies in the Southeast Asian region. According to the Asian development bank, the country's GDP is expected to grow by 6.5% in 2022. The electricity demand is expected to grow by 11% in 2022. Therefore, the Government aims to reduce fossil fuel dependency and replace it with renewable energy resources under the climate safety program. Vietnam's solar generation capacity is expected to grow by more than 16,500 MW by 2022 due to government initiatives to provide tax benefits and subsidies for installing solar power generation projects. Similar growth is expected in the country's wind energy generation, which is also backed well by the Vietnamese Government to become carbon-neutral by 2050.

Depletion of mining resources, declining oil & gas production, and rising building material prices are major challenges to the Vietnamese economy

According to government data, at the current production rate, oil & coal resources in Vietnam will be exhausted in about 56 to 165 years. The country has small and scattered mineral reserves for iron, manganese, zinc, and lead. Mining activities in Vietnam have been facing several problems affecting many socio-economic aspects. Mining is causing serious environmental problems, including erosion, landslides, loss of biodiversity, and pollution of soil, groundwater, and surface water from chemicals used in mining. Mining in restricted mines and improper techniques in mining activities are the main factors for declining mineral resources in the country.

In Vietnam, oil & gas production has continuously decreased, from 16.9 million tons in 2015 to 9.7 million tons in 2020. According to Vietnam Oil & Gas Group, most of the oil & gas reserves are completely exploited. The Government has no countermeasure to avoid the decline of oil & gas production. According to government statistics, domestic oil production has continuously decreased from 16.9 million in 2015, 15.2 million in 2016, 13.4 million in 2017, 12 million tons in 2018, and 11 million and 9.7 million tons in 2019 and 2020.

In 2021, there was a surge in iron & steel prices in the Vietnam market. The prices of building materials, including iron & steel, increased by 30%-40% in 2021, pushing the country's overall price of real estate projects. Other construction materials such as asphalt prices increased by 9%-10%, and cement prices increased by 3-5% in the Vietnam market in 2021. The price of construction projects increased by 30-35% in 2021, hampered project completion on scheduled time due to cash crunches. Some contractors were forced to stop construction and switch to the construction of non-steel materials such as woods etc. The construction price index in 2021 increased by 3.65% from 2020.

Labour shortage triggers the demand for automation & smart operation technology In Construction equipment

Vietnam is facing a severe labor shortage in various industries such as construction, manufacturing, and mining. The country highly depends on migrants workers from Indonesia, Thailand, and Bangladesh. The shortage of labor forces triggers the demand for recent technologies in construction equipment to increase workers' efficiency and reduce the dependency on laborers. For instance, leading construction equipment company Hitachi introduces wheel loaders and excavators with automation, smart operation technology & Concise Hitachi Comprehensive Machine Management support system. The Chinese manufacturer XCMG introduces dual excavators in the Vietnam market, which are extremely flexible, cost-efficient, and easy to transport.

VENDOR LANDSCAPE

• Komatsu, Hyundai Doosan Infracore, Caterpillar, & XCMG are the market leaders and established players in the Vietnam market. Chinese manufacturers such as SANY & XCMG are recently gaining popularity due to Equipment's low price as compared to other manufacturers
• Komatsu, Hyundai Doosan Infracore, XCMG & Caterpillar accounts for 46% of the market share in Vietnam.
• Prominent vendors are Liebherr, Volvo Construction Equipment, and Hyundai construction Equipment, whereas other prominent vendors are Zoomlion, Hitachi Construction Equipment, Terex Corporation & Kobelco.

REPORT COVERAGE:

Earthmoving Equipment:

• Excavator
• Backhoe Loaders
• Motor Graders
• Other Earthmoving Equipment (Others loaders, Bulldozers, Trenchers)

Road Construction Equipment

• Road Rollers
• Asphalt Pavers

Material Handling Equipment

• Crane
• Forklift & Telescopic Handlers
• Aerial Platforms (Articulated Boom Lifts, Telescopic Boom lifts, Scissor lifts)

End Users

• Construction
• Manufacturing
• Mining
• Others