1. Cement industry of Vietnam Status and Prospective (Paper for CMT’s 9th Asia Cement Markets conference) 19-20th April 2007 Hanoi, Vietnam Presented by Chairman of VNCA NGUYEN VAN THIEN

2.  In building and developing economy, industrialization and modernisation of Vietnam, cement industry is considered one of the important industries.  During 5 year plan 2001-2005, cement industry has developed rapidly and strongly. In 2001, cement demand has reached 16.7 million tons; in 2005, nearly 29 million tons. Growth rate during 5 years is 10.40%. In 2006, demand increased to 32.5 million tons.  Growth rate for 5 year plan 2006-2010 will be about 10.50- 11.50%, and the cement demand by 2010 will be about 50 million tons.

3.  I. INVESTMENT IN DEVELOPING CEMENT INDUSTRY DURING 1996-2005. To meet the above-mentioned estimations over recent 10 years (1996-2005) cement industry in Vietnam has continuously developing and modernising considerably in terms of technology, dimensions and structure. Most current cement factories use dry method of technology. Except small vertical shaft kiln cement factories with backward technology and equipment, all rotary kiln cement factories have capacity of 1.4 to 2.3 million tons/year with the same level of technology and equipment to those of other cement industries in the South East Asia.

4.  Regarding ownership structure, except cement joint venture companies with foreign partners, state owned cement factories are gradually moving to become joint stock companies and some private enterprises have emerged.  Over last decade cement industry has contributed about 10-12% GDP of all industries and gradually has met the cement demand in contruction and national economic development.  Facing the demands of international integration and development Vietnam cement industry will have to confront many new challenges. Thus, evaluation and analysis of the status of Vietnam cement industry are necessary for development investment plan in the coming period.

5.  Data shows that cement production has increased 4 times during 10 year period beginning with 7.40 million tons in 1995 to 29 million tons in 2005.  In general, investments in and development of cement industry over recent decade have been correct in terms of directions and methodologies; appropriate in scale and rate and corresponding with national economic development growth.

6.  OUTLOOK FOR VIETNAM CEMENT INDUSTRY IN THE PERIOD OF 2006-2010. Based upon the socio-economic targets approved by Vietnam National Assembly for the period of 2006-2010 which are as follows: –Average GDP growth rate: 7.5%/year. –Average GDP per capita in 2010: US$1080. –National population in 2010: 88 million.

7.  Synthesis of calculations indicates that yearly average increase of cement demand during 2006-2010 is 11% and demand forecast in 2010 will be about 50 million tons.  At the end of the year 2006 total designing capacity in the country was 26.70 million tons of cement (excluding the cement grinding stations). At present about 30 cement projects are being built with total capacity of 35 million tons of cement. Accordingly by 2010 Vietnam cement industry will have total designing capacity of about 60 million tons to meet well the expected demand of 50 million tons.  Investment prospective is constructive and favourable in general. However, facing the economic changes in the region and in the world and adapting to our economic integration, special attention should be given to Vietnam cement development investment during the period of 2006-2010

8. 1. It is necessary to develop the transport and communication in sync with cement projects, especially the sea and land transport. Following preliminary calculations at present, annual transportation of clinker and cement by sea from the North to the Central and the South is about 3 million tons, but by 2010 the transportation volume of them by sea and river from the North to the South will be increased to 5-6 million tons.

9. 2.There should be radical and active measures to protect environment and ecology at factories and vicinity areas, especially the factories having been operational before 2000 need measures to up-grade smoke and dust filtering system to meet criteria of Environment Law. 2.There should be radical and active measures to protect environment and ecology at factories and vicinity areas, especially the factories having been operational before 2000 need measures to up-grade smoke and dust filtering system to meet criteria of Environment Law.

10. 2. By 2010 there will be totally 40 rotary kiln cement factories (capacity of each from 1 to 2 million tons/year) put into operation (excluding vertical shaft kiln cement factories and small scale cement grinding stations). Especially in some provinces such as Hanam, Ninh Binh, Thanh Hoa, Hai Duong, Quang Ninh… there will be cluster of cement factories. For those localities transport, communication, environment polution are issues to be treated immediately from now on. 2. By 2010 there will be totally 40 rotary kiln cement factories (capacity of each from 1 to 2 million tons/year) put into operation (excluding vertical shaft kiln cement factories and small scale cement grinding stations). Especially in some provinces such as Hanam, Ninh Binh, Thanh Hoa, Hai Duong, Quang Ninh… there will be cluster of cement factories. For those localities transport, communication, environment polution are issues to be treated immediately from now on.

11. 4. Another most important problem to Vietnam cement industry for the time being is to enhance the competitiveness. This issue should be taken into consideration right from the outset of preparation for investment decisions covering technology, equiment, investment rates, profits, production cost, sale price, product consumption possibilities, capital recovery plan etc. These are the basic elements to be decisive to plants after construction and entry into operation which can be competitive enough with, first of all, local cement factories and then, imported cement. 4. Another most important problem to Vietnam cement industry for the time being is to enhance the competitiveness. This issue should be taken into consideration right from the outset of preparation for investment decisions covering technology, equiment, investment rates, profits, production cost, sale price, product consumption possibilities, capital recovery plan etc. These are the basic elements to be decisive to plants after construction and entry into operation which can be competitive enough with, first of all, local cement factories and then, imported cement.

12. AAAAs I have mentioned above, the Vietnam domestic demand for cement in the year 2006 was 32.5 million tons, an increase of 12% compared with the previous year. DDDDemand increase is a good condition for cement manufacturers but the upsurge in the price of most input materials is a bad one for them. In the year 2006 the soaring of price of oil and petrol, imported clinker, PVC bag, freight charge ect resulted in cement production cost increase and consequently the cement price has risen 2 USD per ton on average in the South and 1 USD per ton on average in the North. At present the average delivered price of bagged cement in the South is 60 USD per ton and respectively in the North is 50-51 USD per ton.

13.  This 2007 year the domestic demand is expected to be from 35 to 36 million tons, an increase of 10% compared with last year.  To produce 36 million tons cement of all kinds, there will be a need for about 4 million tons of imported clinker. However, the importation of clinker will be gradually reduced year by year due to new projects would come on stream.

14.  Before I conclude my paper may I wish all of you good health, successes, happiness; and good success for our conference.  Thank you. Presented by Nguyen Van Thien Chairman of VNCA