Domestic construction companies broaden horizons

November 02, 2023 | 20:00
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Vietnamese construction firms are increasingly setting their sights on international markets, with some industry leaders undertaking ambitious projects abroad.

Coteccons in mid-October announced the new launch of Coteccons Constructions Inc., a significant move to spearhead its operations in international markets. The establishment of the new entity underscores its strategy to export its construction services globally, focusing primarily on cash investments from its equity capital, without resorting to borrowed funds.

Domestic construction companies broaden horizons
Domestic construction companies broaden horizons, illustration photo/ Source:

The decision forms part of the company’s broader objectives laid out by its executive board. In August, Christopher Senekki was appointed to lead the expansion of Coteccons and its subsidiaries into global markets.

Bolat Duisenov, chairman of Coteccons, outlined the group’s aspirations. “Our goal is to bring our capacity, quality, and standards to a wider market, to step onto the global stage,” Duisenov said.

He indicated that one of the company’s major Vietnamese clients is already expanding operations into three other countries, potentially opening doors for Coteccons to undertake overseas projects.

International expansion is far from a novel concept, with several local firms having already embraced this strategy in their growth plans.

Hoa Binh Group – another prominent construction firm – in late August announced a partnership with PrimeTech Constructions, signing a contract to spearhead a nearly $2 billion development project in the Pacific Island nation of Vanuatu.

The agreement sees Hoa Binh and PrimeTech Constructions co-managing the venture, positioned as the chief design and construction contractors for building components valued at approximately $900 million.

The project, sprawling across nearly 60 hectares, will feature a commercial centre, a hotel block, and a resort area, funded by Matevulu Sands Ltd. The construction is slated for completion over an eight-year time frame.

“Commencing this November, we are gearing up to initiate the project, aiming for the latest start by the second quarter of 2024,” said PrimeTech CEO Trang Le Chau.

Chau also revealed that the company has prepared for subsequent projects in Queensland, Australia, anticipated to be finalised alongside Hoa Binh Group within the next five years.

Last year, Le Viet Hai, chairman of Hoa Binh Group, disclosed revenue and profit goals for a decade into the future at $20 billion and $1 billion, respectively. “To achieve these milestones, expanding beyond Vietnam’s borders is imperative,” Hai said.

In August 2022, the company solidified this direction by establishing a foreign market subcommittee and appointing David Martin Ruiz as overseas construction director. Key strategic markets include Canada, the US, Australia, and Europe.

Hai also conceded that the group’s aim to export its construction expertise internationally has been slower than anticipated but remains a steadfast goal. “Especially in times of real estate downturns, project developers face funding shortages and delayed payments, highlighting several limitations within our domestic building market.”

Responding to limitations in the domestic market, Vietnamese companies like construction tech group CONINCO are also turning their gaze towards foreign markets, seeking opportunities that are both stable and profitable.

The strategic redirection holds the big potential to not only transform Vietnam’s fortunes of, but also to strengthen the country’s footprint in the international construction arena.

As part of this outward expansion, CONINCO has been proactive in establishing its presence beyond Vietnamese borders, with Laos being its first international market in 2011.

Company deputy CEO Nguyen Dac Phuong said, “We chose Laos because of the special traditional relationship between the two countries, and because the geographical proximity of Vietnam and Laos greatly facilitates transactions and travel.”

Despite Laos’ economy growing at an annual rate of around 6.8 per cent, with agriculture still being a dominant force in the country’s economic structure, the Laos government is ambitiously working towards comprehensive development.

“This is an opportunity for CONINCO to approach projects faster and more effectively, contributing to giving a new face to our neighbouring country,” Phuong said, referencing key projects like the fourth Greater Mekong Subregion Corridor urban development venture, among others.

According to insights from Allianz, the global construction market is poised for a sustained period of robust growth. This optimistic forecast is propelled by several key factors, including substantial increases in government infrastructure spending, rising global populations, accelerated urbanisation in developing regions, and an intensified commitment towards building a more sustainable world.

Oxford Economics projects expansion in the sector, with anticipated growth of $4.2 trillion over the next 15 years, in a surge that represents an increase of over 40 per cent in the global market size.

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