06 Nov 2020
Posted in Construction
Vietnam construction industry output set to grow by 5.5% in 2020, forecasts GlobalData
The Vietnam construction industry is the best performing one in the Asia-Pacific (APAC) region. Despite losing the momentum due to COVID-19, it has continued to grow strongly (relatively) in 2020. According to the General Statistics Office (GSO) of Vietnam, construction value-add recorded a growth of 5.7% (year-on-year) in Q3 2020. As a result, the cumulative growth rate for the three quarters was at 5%. The industry will continue to gain further momentum in the fourth quarter and record an overall growth rate of 5.5% in 2020, says GlobalData, a leading data and analytics company.
Prior to the COVID-19 outbreak, the industry had recorded an average annual growth rate of 9.6% over the last five years (2015-2019). However, construction activities were disrupted due to the stringent measures taken by the government to contain the spread of the virus, with the growth falling below 5% (in the first quarter of 2020) for the first time since the first quarter of 2013. Following the subdued growth of 4.4% and 4.6% in the first two quarters, respectively, the industry is showing signs of regaining the momentum in the third quarter, which is expected to accelerate further in the coming quarters.
Dhananjay Sharma, Construction Analyst at GlobalData, comments: “Efforts to attract foreign investments through the public private partnerships (PPP) model will support the construction industry during 2020-2024. In June 2020, the national assembly adopted a law on PPP investment, which is aimed at regulating investment activities and attracting private investment under the PPP model.
“Vietnam plans to speed up spending on infrastructure projects to help support the overall construction output growth, with focus on improving regional connectivity through the development of the country’s rail, road and air transport infrastructure, coupled with efforts to boost energy production.”
The residential construction sector is likely to remain under pressure in the short- term, with the support coming from government plans to build affordable houses for middle and low-income families in the country. To encourage the private investors, the government is also offering incentives to developers to construct affordable houses and has set aside US$1.3bn for the construction of affordable houses in the country during the period of 2018–2022.
Sharma concludes: “Vietnam’s emergence as an alternative to manufacturing base in China would continue to be further aided by the COVID-19 situation and is expected to accelerate foreign investments in the country, which would have a multiplier effect on the overall economy.”