HOUSELINK | REPORT ON THE IMPACT OF COVID-19 EPIDEMIC ON VIETNAM CONSTRUCTION

(HOUSELINK) – Report on The impact of Covid-19 epidemic on Vietnam Construction conducted by HOUSELINK Market Research team open a specific view about the difficulties, challenges and opportunities for Vietnam Construction Industry in this time. 

By March 31st 2020, a total of 207 persons tested being positive with COVID-19 disease in 27 provinces in Vietnam, of which 57 cases have been cured. The number of infected people is predicted to increase in the coming period

Construction implementation interrupted and foreign direct investment heavily affected

The total foreign direct investment in the first quarter 2020 reaches USD 8.6 billion, which decreases 20.9% compared to the same period in 2019. The serious condition of the epidemic, combined with the Government policy of movement restriction, made the investment drop sharply in February and March 2020. While statistical figures show a pronounced decline in foreign direct investment, the total newly registered capital increases by nearly 45%, mainly thanks to a sharp increase in investment in scientific and technological activities.

Difficulties and challenges

More and more difficulties, it is statement made by construction firms at the beginning of 2020. According to the survey from the General Statistics Office of Vietnam, in 6,600 surveyed construction enterprises, up to 47.5% and 46.9% responded that the business situation would be more difficult in the first quarter and second quarter of 2020. While domestic non-state-owned construction firms have a fairly positive view of the business situation, with more than 53% of enterprises evaluated that the business situation will be more favorable or unchanged in the first two quarter; the state – owned companies has a rather cautious view of developing prospects in the first half of 2020, with more than 54% of enterprises said the business situation will be tougher in the first six months of 2020.

While civil construction projects are being delayed indefinitely due to insufficient legal conditions or financial difficulties, decrease in foreign direct investment during the epidemic causes industrial construction plummeted. In addition to the difficulties relating directly to sales, the construction enterprises have to face with expenditure issues as well as problems related to business activities

While new construction projects tend to drop drastically, the increasing trend of operating costs makes the construction firms facing with a series of difficulties to thrive in the epidemic period and grow in the future. 

Opportunities

In addition to the economic challenges and extreme, not – measurable risks because of the COVID–19 epidemic, there are still some opportunities to develop in this difficult situation. If the Vietnamese enterprises in general, and construction enterprises in particular can grasp, turn the risk into opportunities, the development prospects after the epidemic are extremely great.

After COVID – 19 epidemic is controlled, foreign direct investment in the manufacturing and processing industry is expected to increase sharply by two main reasons: i) manufacturers tend to shift factories to outside China to minimize the risk of supply chains; II) after the EU – Vietnam Free Trade Agreement (EVFTA) is adopted, investors tend to move factories to Vietnam to enjoy tax rate benefits when exporting goods to Europe. The number of textile, leather and footwear enterprises with the form of foreign direct investment are predicted to rise sharply in the upcoming time.

Besides building new factories, some investors tend to lease the ready-built factories, especially investors in light manufacturing industries, logistic centers, etc.
Download the full Report Here.