I. Position and Role of the Chemical Industry
The chemical industry is one of the five largest manufacturing sectors globally, contributing approximately $5.7 trillion to the global GDP, equivalent to 7% of the world’s total gross domestic product (GDP), and creating over 120 million direct and indirect jobs. In Vietnam, the chemical industry accounts for around 10–11% of the annual industrial GDP, with labor productivity 1.36 times higher than the national average due to a high degree of automation. It is projected that this proportion will increase to 13–14% once ongoing projects are completed.
Among Vietnam’s largest industrial sectors, the chemical industry ranks third, contributing 2–5% of the total industrial GDP. The industry’s diversity is evident across its 10 main sub-sectors, including fertilizers, petrochemicals, cosmetics, basic chemicals, industrial gases, and paints and printing inks. Notably, the fertilizer sub-sector, with over 894 enterprises, represents 48% of the total number of companies operating within the chemical industry.
II. Current Development Status of Vietnam's Chemical Industry
In 2022, the production index of the chemical industry increased by 3.7%, maintaining a growth rate of 4.9% in the first seven months of 2023. Products such as cosmetics, soap, and detergents recorded the highest growth, reaching 7.6%.
Furthermore, the export value of chemical products reached $3.09 billion in 2022, an increase of 23.1% compared to the previous year. Major export markets include China, Japan, and South Korea, with export values of $664 million, $573 million, and $585 million, respectively.
Vinachem - A Key Driver in the Domestic Chemical Industry
The Vietnam National Chemical Group (Vinachem) plays a pivotal role in driving the development of the domestic chemical industry, affirming its leadership position in the sector. In 2023, Vinachem achieved a total revenue of VND 55,286 billion, with a profit of VND 3,277 billion, contributing VND 1,922 billion to the state budget. The group ensured employment for approximately 18,000 workers, with an average monthly income of VND 13.52 million per person.
In terms of production, Vinachem demonstrated impressive performance, achieving an output of over 3 million tons of fertilizers, 3.4 million automobile tires, and 330,000 tons of detergents. Many products recorded substantial growth compared to 2022, including a 35% increase in DAP fertilizers, 17% in urea, 15% in superphosphate, 5% in commercial caustic soda, and 18% in detergents. These products not only met domestic demand but also targeted exports, particularly fertilizers, pesticides, tires, cleaning products, and ammonium nitrate (NH4NO3), a precursor for explosives.
Vinachem's development has been bolstered by the application of advanced technologies, aligning closely with regional and international standards. The group has also prioritized safety and environmental factors, contributing to enhanced competitiveness and the sustainable development of Vietnam's chemical industry.
Chemical Imports – A Strategic Factor in the Supply Chain
Alongside domestic production, chemical imports play a crucial role in Vietnam's chemical industry supply chain. In January 2024, the import value of chemicals and chemical products reached $1.35 billion, a 37.3% increase compared to the same period in 2023. The primary import markets include:
China: $586 million (+41.3%)
South Korea: $124 million (+39.6%)
Taiwan: $92 million (+16.2%)
These figures highlight the strategic reliance on imports to supply raw materials for the industry. Imported products not only meet domestic demand but also support the production of export goods, enhancing international competitiveness and promoting the sustainable development of Vietnam's chemical industry.
Both robust domestic production and strategic imports are vital to enabling Vietnam's chemical industry to meet growth requirements and scale expansion in the future.
Perspectives from Specific Sectors
Rubber Industry
Major rubber enterprises such as GVR (Vietnam Rubber Group) and DPR (Dong Phu Rubber Company) continued to achieve positive results, supported by a sharp increase in rubber latex prices, averaging over 40% compared to the same period last year. During the first nine months of 2024, revenue across the industry grew steadily, exceeding a 10% increase. Post-tax profit and gross profit margins also maintained positive growth, reaching over 20%. However, PHR (Phuoc Hoa Rubber Company) reported unfavorable results, as it did not generate revenue from industrial park land, leading to a significant decline in profit.
Plastics Industry
The business performance of the plastics sector in Q3 and the first nine months of 2024 was less favorable. Major companies such as BMP (Binh Minh Plastics Joint Stock Company), NTP (Tien Phong Plastics Company), and AAA (An Phat Bioplastics Joint Stock Company) were negatively impacted by the slow recovery of the real estate market. Industry-wide revenue declined by 1–10%, directly affecting profitability.
Despite this, AAA achieved the highest gross profit margin in the first nine months, at 43.71%, due to effective cost management. Conversely, other plastic companies faced challenges due to rising sales and administrative costs, as well as unstable input material prices such as PVC.
Basic Chemicals Sector
The basic chemicals industry demonstrated clear differentiation in business performance. Companies like CSV (Southern Basic Chemicals Joint Stock Company) leveraged the market effectively to expand revenue and profits. Meanwhile, DGC (Duc Giang Chemicals Group Joint Stock Company) maintained stable profitability from basic chemical products such as NaOH, HCl, liquid chlorine, and H2SO4, driven by strong demand from exports and the electronics sector. However, DGC also faced pressure on profit margins due to financial constraints and rising sales costs.
General Assessment
The rubber, plastics, and chemical sectors each exhibited unique highlights and challenges in 2024. The rubber industry benefited significantly from high latex prices, while the plastics sector faced pressure from a sluggish real estate market. The chemicals sector stood out with export opportunities and the production of high-value products but also faced rising raw material costs and increasingly stringent environmental standards.
The strong recovery of international markets and robust domestic demand are expected to play pivotal roles in driving growth for enterprises across these sectors.
III. Opportunities and Growth Potential for Vietnam’s Chemical Industry
1. Green Initiatives Toward Sustainable Development
In the context of a global shift toward green production and sustainable development, Vietnam's chemical industry is simultaneously confronting opportunities and challenges. As one of the energy-intensive and high-emission industries, domestic chemical enterprises have implemented various targeted measures to reduce greenhouse gas (GHG) emissions, conserve energy, and transition to clean energy sources.
Notable Results from Green Efforts
CO2 Capture and Environmental Improvement: Companies such as Ninh Binh Fertilizer and Chemical Company Limited and Ha Bac Fertilizer and Chemicals Joint Stock Company have invested in CO2 recovery systems, reclaiming an average of 30–40 thousand tons of CO2 annually for reuse in other industries. Additionally, these plants have expanded green spaces, with trees occupying over 15% of their facilities, helping absorb and store carbon.
Energy Conservation: Many firms have replaced fluorescent lights with energy-efficient LED lighting while utilizing agricultural by-products such as rice husks and sawdust as boiler fuel in industrial production. These solutions not only reduce fossil fuel consumption but also lower environmental pollution and operating costs.
Transition to Clean Energy
Investment in Renewable Energy: Companies like Da Nang Rubber Joint Stock Company and Ninh Binh Fertilizer and Chemical Company Limited have installed rooftop solar power systems. These initiatives not only reduce GHG emissions but also enhance economic efficiency by saving energy.
Green Materials in Fertilizer Production: Fertilizer plants in southern Vietnam have shifted to using rice husks and sawdust as substitutes for coal and natural gas, helping reduce reliance on traditional natural resources.
Extended Producer Responsibility (EPR)
Recycling and Waste Management: Southern Battery Joint Stock Company has implemented programs to collect and recycle discarded products from customers, while Da Nang Rubber Joint Stock Company provides customers with waste management solutions through specific policies. These measures represent significant progress in promoting a circular economy within the chemical industry.
With concrete steps toward green production, Vietnam’s chemical industry is steadily solidifying its position in the global supply chain. Green transformation not only offers environmental benefits but also unlocks growth opportunities and enhances competitiveness for enterprises in the sector. This will serve as a critical foundation for the chemical industry to contribute meaningfully to the nation's sustainable economic development goals.
2. Potential from Large-Scale Chemical Projects
Vietnam's chemical industry is on the cusp of significant breakthroughs, driven by the robust growth of large-scale investment projects. These projects not only expand production capacity but also contribute to sustainable development and modernization, thereby enhancing the industry's position in the global supply chain.
Breakthroughs from FDI Projects
In recent years, Vietnam has witnessed a surge in investment from international conglomerates, particularly in green and high-tech chemical projects. A notable example is Prime Minister Pham Minh Chinh's visit to South Korea in July 2024, where Ba Ria - Vung Tau Province signed agreements for two major projects with Hyosung Group:
Bio-BDO (biological butanediol) production project: With a total investment of USD 730 million, this plant is expected to achieve a capacity of 200,000 tons per year, meeting the demand for spandex fiber, technical plastics, and biodegradable packaging.
Carbon fiber production project: With a total investment of USD 500 million, this project aims to enhance the industrial materials value chain.
Additionally, South Korea's SK Group launched its Ecovance bioplastic factory in Hai Phong, with an investment of USD 500 million. The facility focuses on producing advanced biodegradable plastics such as PBAT, PBS, and TH solvents.
Momentum from the Long Son Petrochemical Complex
In September 2024, the Long Son Petrochemical Complex, operated by SCG Group, officially commenced operations with a total investment exceeding USD 5 billion. This complex is projected to produce 1.4 million tons of plastic resin annually, reducing reliance on imports and enhancing domestic firms' competitiveness.
Beyond petrochemicals, the Long Son complex is expected to drive growth in related sectors such as automotive, electronics, packaging, and electrical equipment.
Strength from Domestic Enterprises
Vietnamese enterprises are also advancing large-scale chemical projects to compete effectively in international markets and promote sustainable development:
Duc Giang Nghi Son Chemical Complex: With a total investment of VND 12 trillion, this project has a capacity of 136,000 tons of chemicals per year, aiming to replace imported goods and bolster the domestic basic chemicals sector.
Alumina production project in Dak Nong: With a capacity of 3 million tons per year and an investment of VND 57 trillion, this project by Duc Giang Chemicals promises to contribute VND 4.8 trillion annually to the provincial budget.
Radial tire production plant by Da Nang Rubber Joint Stock Company: Expected to increase capacity to 1 million tires per year by the end of 2024, with a total investment of VND 917 billion.
Chemical plant in Nhon Trach 6: With a total investment of VND 2 trillion, this project by Southern Basic Chemicals Company aims to meet the growing domestic demand.
These large-scale projects not only boost Vietnam’s chemical production capacity but also solidify its regional position, fostering sustainable development and driving strong economic growth.
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