Massive Public Spending Fuels Construction Boom
A significant surge in transport infrastructure spending is unlocking substantial growth opportunities for major construction contractors across Vietnam. This wave of development is being driven by the government’s ambitious public investment agenda, which is fueling robust, long-term demand for construction services. The government has set a target to complete 3,000 km of expressways this year, with an additional 2,000 km planned for construction by 2030. In the railway sector, both Hanoi and Ho Chi Minh City have monumental plans for new urban rail systems. Hanoi is developing 10 metro lines spanning over 417 km, while Ho Chi Minh City has a projected investment of $77.2 billion for its 10-line urban rail network, with seven lines targeted for completion by 2035. The landmark North-South high-speed railway is also under consideration, with a completion target of 2035. According to Nguyen Quang Huy, the CEO of Deo Ca Group, this immense workload is a boon for experienced contractors with strong financial standing, technical expertise, and a skilled workforce.
Record Backlogs Secure Future Revenue and Profit
The current surge in project activity has resulted in substantial backlogs for Vietnam’s leading infrastructure contractors, ensuring a stable and extensive workload for the coming years. Major firms have reported project backlogs that significantly exceed their previous year’s revenues, providing a clear revenue pipeline. For example, Deo Ca Group has signed contracts valued at $1.6 billion, with a pending backlog of $1.36 billion—a figure that is expected to sustain its operations through 2028 based on its 2024 revenue. Similarly, Vinaconex has a reported backlog of $852 million, which is 3.2 times its 2024 construction revenue. Other key players, such as Lizen Corporation and Cienco 4, also have impressive backlogs, demonstrating a strong pipeline of work for the entire industry. These backlogs are not just numbers; they represent stable future work, allowing companies to focus on resource mobilization and aggressive bidding on new projects to secure even more revenue.
Diversified Business Models and Government Support
Beyond their primary construction activities, many of these contractors are leveraging their diversified business portfolios, particularly in lucrative sectors like industrial and residential real estate, which provide a critical supplement to their construction income. Vinaconex, for instance, is actively pursuing real estate deals, with plans to divest from a major urban-tourism project that is projected to generate over $200 million in revenue. Similarly, Cienco 4 is continuing to invest in mixed-use tourism and resort complexes while also managing real estate developments in major urban centers. This strategic diversification strengthens their financial position. The broader economic context is also highly favorable, with public investment being a key driver of growth. Recent government decrees have decentralized power to local authorities, empowering them to expedite projects, and the Prime Minister is personally pushing to ensure a massive $25.2 billion in public investment is fully disbursed in the second half of the year, further solidifying the positive outlook for the construction sector.
