Importance of chemicals and resources in the Vietnamese economy

Having started as a wartime industry, the chemical industry in Vietnam has developed into an integral part of the economy, providing a diversified range of resources for other sectors. For instance, the agrochemical segment within this industry has been supplying essential products for the agriculture sector, historically the most important sector of the Vietnamese economy. The production volume of agrochemical products, such as insecticides and pesticides, has been increasing gradually in recent years to meet the growing domestic demand from farmers. On the other hand, domestic suppliers have been struggling to produce enough chemicals and chemical products for the rapidly expanding, resource-intensive industrial sector. Consequently, imports of selected chemicals and resources, including rubber imports, plastic products imports, and paper imports, have been used to address the domestic production shortages in the country.

Challenges of the chemical industry in Vietnam

Despite playing a crucial role in the emerging economy of Vietnam, the chemicals and resources sector has been facing several issues recently. Low productivity is a major contributor to the dependence on chemical imports, especially from China. In addition, much of the technology employed by players within this sector is outdated, leading to their inability to supply products needed for manufacturing, such as sodas, synthetic fibers, or dyes, which are all essential for textile and garment production, one of the leading exports of Vietnam. Another challenge lies in the negative environmental impact of chemicals and resources processing. The waste treatment system and safety guidelines for workers are still largely underdeveloped across the country, indicating a lot of room for improvement. Lastly, global chemical production, including in the Asia Pacific region, has been hit hard due to the COVID-19 pandemic. On the flip side, there has been some positive development, signaling the recovery of this sector in the last months of 2020 among Asian countries, including Vietnam. 

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