There has been a great demand for chemical products in various sectors of the economy in recent years, which is why the industry has experienced steady and stable growth over the years. Whether applied within the manufacturing process in factories, workshops, or to help in agricultural production, the industry can provide its wide selection of products. The industry has become commonly known to all in Vietnam; and by accomplishing many achievements, it has also become a key driver for economic growth.
Vietnam's chemical industry started within the anti-French resistant war. During this period, chemicals were produced to serve in national defense, agriculture, and daily life. Over almost 70 years of development, the chemical industry has expanded on a large scale with various sub-sectors established. The highest growth rate fell within the period from 1991 to 1995, with 20% per year. Within the last years of the 20th century, the chemical industry in Vietnam had developed in all sectors of the economy.
The chemical industry produces a wide range of products to serve all other industries related to technical economics. The chemical industry can exploit various resources such as minerals, oil, and gas to products, by-products, and even waste from industry and agriculture. It plays a crucial role in the country's economy.
The economic reforms carried out in Vietnam boosted economic growth and, at the same time, industrial-agricultural development. The demand for chemical raw materials increases with an annual growth rate of the chemical production of 15%.
Alongside rapid growth, producing chemical products results in an increase in chemical waste. Some factories produce chemicals without a system for waste treatment, which greatly affects the environment. The waste pollutes air, soil, water, consequently creates a negative impact on people’s health. Furthermore, chemical production lines may lack safety equipment, endangering workers.
The chemical industry has a crucial role within the economy of Vietnam, however, this role remains limited. The industry has low productivity, which makes it unable to satisfy the rapidly growing needs of other economic sectors. Additionally, Vietnamese chemical products even have to compete with chemical products imported from other countries, especially China.
The technology used in Vietnam’s chemical industry is still outdated with low labor productivity. The chemical industry continues to be unable to meet the needs of other economic sectors. Many essential products in the chemical industry such as sodas, plastics, synthetic fibers, or dyes have yet to be produced. The manufacturing industries to use these materials are mainly dependent on imports.
Vietnam’s chemical industry accounts for a significant proportion in the industrial structure with a percentage of 11.2%. However, compared to newly developed countries in Southeast Asia, the chemical production capacity is still too small.
The COVID-19 pandemic has made an unprecedented impact on the world economy and the state of the chemical industry, which has reduced demand significantly in 2020. As the industry moves into 2021, economic, social, environmental, and political changes are expected to play an even bigger role in shaping the industry's future.
Despite the setback in 2020 and existing problems, chemical production has shown signs of improvement within the first quarter of 2021, with a rise of 31.5% in production rate compared to the same quarter of 2020. With an accurate strategy and good preparation, the chemical industry can turn challenges into opportunities to thrive.
In conclusion, the industry in Vietnam is still witnessing strong growth. In the context of deep international integration, as well as the increase in foreign investment, this industry still has great potential for development.
Source: compiled by VietnamCredit