Select your location
Tractus Global
Vietnam’s chemical industry has witnessed steady growth over the years, driven by the country’s rapid industrialization, urbanization, and expanding population. This thriving industry is expected to reach a market value of US$3.72 billion in 2024, boasting a projected compound annual growth rate (CAGR) of 8.73% over the next five years.
The Vietnamese chemical landscape is remarkably diverse, encompassing various segments including fertilizers, plant protection products, pharmaceuticals, petrochemicals, basic chemicals (including precursor explosives and industrial explosives), rubber products, electrochemistry, detergents, paints and inks, and industrial gases. This industry is a melting pot of domestic and international players, with prominent Vietnamese companies like PetroVietnam, Vinachem, Binh Son Refining and Petrochemical Company Limited, and Dung Quat Refinery leading the charge.
However, amid this remarkable progress lies a critical challenge: the environmental impact of chemical production. While the industry flourishes, a concerning issue arises – the improper treatment of chemical waste. The irresponsible disposal by some factories leads to air, soil, and water pollution, posing a significant threat to public health and increasing the difficulty of obtaining licensing and approval. Additionally, the lack of safety equipment in certain production lines exposes workers to hazardous conditions.
In June 2022, the Vietnamese Government approved a strategy for the development of the country’s chemical industry until 2030, with a vision extending to 2040. The goal is to create a chemical industry that is not only fast-growing but also sustainable, technologically advanced, environmentally friendly, and aligned with principles of green growth and a circular economy.
The strategy emphasizes the development of key sub-sectors within the chemical industry, including basic chemicals, petrochemicals, technical rubber, pharmaceuticals, and fertilizers.
Key targets set by the strategy include achieving an average annual growth rate of 10-11% for the chemical industry sector by 2030, with the sector accounting for around 4-5% of the total industrial sector. By 2040, the average annual growth rate is expected to be around 7-8%, with the sector maintaining its share of 4-5% of the total industrial sector.
To ensure the plan’s successful implementation, collaboration is required from various government entities. This includes the Ministry of Industry and Trade, People’s Committees of Provinces and Centrals, and others. Each department will play a crucial role in specific aspects:
Vietnam’s chemical industry presents a promising path forward, driven by consistent growth and a diversified landscape. However, addressing the critical issues of environmental impact and worker safety remains paramount. The recently approved government strategy (including the 2022-2030 plan for sustainable development) underscores a commitment to tackling these challenges. This comprehensive approach emphasizes sustainable practices, technological advancements, and coordinated efforts across various ministries, offering a clear roadmap for responsible industry development. As Vietnam strives to achieve its ambitious growth targets while prioritizing environmental well-being, implementing concrete actions and fostering a culture of responsible production will be essential for ensuring the industry’s long-term success.
How Tractus Can Help
Tractus has been assisting companies to make informed decisions about where to invest and how to expand their business in Asia and beyond for over 25 years. Our partners and senior management leverage their experience running successful manufacturing and service businesses, bringing this commercial perspective to our client work. We have proven experience advising companies on their location strategies, helping them optimize their real estate portfolios, and identifying the optimal sites to support their companies’ growth. We use a proven, integrated site selection, real estate and incentives negotiations methodology, comparing locations in a systematic and objective way that leads to a defensible result. Let us show you how we can support you to make your next investment decision a success.
Authored by
Duyen (Olivia) Nguyen is a consultant based in Vietnam.
Recent Insights
From Diesel to Electric: Thailand’s Transition to an EV Manufacturing Powerhouse
Investment Insomnia: APAC Executives’ Mixed Perceptions of U.S. Investment Climate | Tractus
Vietnam’s Land Law 2024: A New Era for Foreign Investment
Production and sales of electric vehicles (EVs) in Thailand have been on the rise in recent years due to the shift in demand from ...
On January 15, 2024, Vietnam’s 15th National Assembly enacted the revised Land Law 2024, a legislative overhaul poised to reshape the ...