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Thứ Ba, 20:16 22/3/2011

Positive outlook for road infrastructure in Vietnam 2011

20:16 | 3/22/2011 |  0 feedback
10 percent Domestic Automobile Growth Drives Investment for Vietnamese Road Infrastructure.
2011 looks like its going to be a very happy new for Vietnam’s construction industry with a proposed 20 road projects set to start.  

Majority of the projects involve upgrading the road quality in the country, while a couple of completely new highways are expected to be built this year as well if significant financial investment does pour into the country.

And given that 2010 was such a good year for Vietnam in terms of attracting foreign capital because of cheap labor cost, a sizable domestic market, and favorable economic policies. One speculates that getting the required foreign direct as well as indirect capital to flow into the country shouldn’t be a problem for the construction sector which contributed 7% to the country’s GDP in 2010.

Although creating efficient trade routes to major domestic airport and port is a major reason to upgrade major highways in the country with the countries total exports amounting to an estimated at $71.6 billion, up 25.5% compared to 2009.  
With exports continuing to experience 20 percent growth in 2011 thanks to the global economic recovery, it is not the only reason that the government has decided to upgrade the countries road infrastructure.  

Vietnames are snapping up automobiles much faster now that the government has cut the import tax rate of automobiles according to Pham Dang Manh Hong Lan, an Equity Analyst at ThangLong Securities in a note.  
“From 1990 to 2009, as per our estimation, Vietnamese car registration number grew at a  compound annual growth rate  of 9.86% and reached 1.49 million cars in the end of 2009. It equaled to 17.36 cars in 1,000 peoples. In 2010, we expected car registration in the end of the year would be 1.64 million cars, growing by 10.23% (y-o-y),” he said. 

Pham explained that the previously high prices of automobiles would obviously result in lower car ownership. 
“As Vietnam cuts tariffs on cars under WTO and ASEAN commitment, the car prices may go down. Lower prices may stimulate car demand and consumption for individual travelling as well as corporate enhancement of passenger or freight transportation capacity. In accordance with WTO commitments, most import tax rates of passenger cars must be 50 – 70% since 2014 or 2019 for some categories. For commercial and other vehicles, import tax rates must be 10- 70% and the deadline according to categories will be 2010 or 2012 or 2014,” explained Pham.

And because of the strong demand for auto vehicles, its road infrastructure is reaping the benefits in the form of massive investments.

“Vietnamese transport infrastructure is still in poor condition, (with a) lack of highways and car parking. The result is constraints on automotive industry and Vietnamese economy. In the future, there will be more and huger investment projects in infrastructure of Government and private investors with expectation of achieving high return according to high demand,” said Pham.  

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