The third quarter's gross domestic product (GDP) fell 6.17% from the same period previous year, according to the General Statistics Office, as a result of the pandemic's effects. This represents the biggest drop in GDP since Vietnam began reporting quarterly GDP. At the same time, GDP increased in the previous nine months by 1.42% compared to the same period last year.
As a result, the final quarter of the year was affected by growth pressure. Prime Minister Pham Minh Chinh directed to concentrate all efforts on economic development in the last months of the year in addition to the anti-epidemic mission, review and remove obstacles for enterprises, and speed up the disbursement of public investment resources.
Public investment is the "puller" that the State can essentially use to take the initiative when the majority of the economy's sectors are in tremendous difficulty, particularly when the residual capital is in such poor condition. The estimated 250,000 billion VND, or roughly 11 billion USD, will make up the 2021 budget plan. According to the Ministry of Finance, by the end of September, the actual disbursement of public investment capital had only reached 47.38% of the assigned plan, with disbursement rates as low as 40% in 36 ministries and central agencies and 20 localities, and over 60% in 4 central agencies and 11 localities.
We are certain that public investment in the final three months of 2021 will unquestionably be better than it was at the start of the year due to this fact, the government's resolve, and the pandemic situation that is beginning to ease stress across the nation. Agribank Securities Company (Agriseco) asserts that encouraging public investment will have a positive impact on the economy due to its influence across a variety of industry sectors. The General Statistics Office estimates that if public investment expenditure rises by 1% between 2021 and 2025, GDP will rise by 0.058%. Disbursing 1 dong of public investment capital at the same time resulted in 1.61 dong of non-state capital, which is 1.42 dong more than the prior quarter.
When public investment is encouraged, sectors directly involved in projects of technical infrastructure development, construction, transportation, etc. will be the first to be benefited. According to BIDV Securities Company (BSC), construction materials (steel, cement, sandstone, plastic, asphalt), the construction industry (construction, ETC, intelligent transportation, electrical construction, and electrical materials), and the real estate industry are three industry groups that are predicted to receive public investment (including residential real estate and industrial real estate).
It is clear that connected supporting industries will also benefit from the megaprojects, in addition to those industries actively involved in them. For instance, the demand for machinery and equipment as well as basic materials like non-ferrous metals, metals, needles, hand tools, welding materials, wooden boards for production, metal connection and fabrication of steel structures has significantly increased as a result of the construction of industrial production plants, factories, infrastructure, and roads. Kim Tin Group is the industry leader in the production and distribution of these auxiliary industrial goods. According to projections, Kim Tin Group Joint Stock Company's distribution channel will sell around 3,600 tons of non-ferrous metals, 28,000 tons of welding supplies, and 60,000 m3 of MDF boards in the fourth quarter. According to forecasts, revenue will rise by roughly 24% in the fourth quarter compared to the third, when it jumped by 33% for welding supplies and about 2.5 times for important products like MDF board.
Kim Tin presently has 45% of the domestic welding consumables market share and ranks among the top 15 largest businesses in the globe in this sector. These welding materials include welding rods, welding wires, solder paste, and welding gear and equipment. The Group will be able to deliver goods to clients more quickly during the year-end period thanks to its ownership of an omni-channel distribution system with more than 6,000 agents in all three areas after more than 20 years of work.
Along with welding supplies, Kim Tin also holds a significant market share of more than 20% in the local market for MDF boards and board-related items. This is another area that could gain when the residential and commercial real estate markets flourish as a result of encouraging public investment.
The Long Thanh International Airport Phase I, the 11 projects that make up the North-South Expressway, the Nhon-Hanoi metro line, the Thu Thiem 2 and Thu Thiem 3 bridges, and the No. 1 Ben Thanh-Suoi Tien metro line are just a few of the public investment projects that are expected to start construction in 2021 and have a positive impact on the real estate market, according to VNDirect Securities Company. Information on planning aids in raising land values and improving infrastructure to help draw in foreign investment, which will be the key factor in the real estate market's growth in the upcoming years.
When the economy improves, this will provide as more incentive for companies to spend and produce significant growth rates (Vietnam is expected to set a growth target of 6-6.5 percent in 2022). Similar to Kim Tin, companies aim to increase their current market share of MDF boards from 20% to 45% by 2025 by fostering joint venture activities in deep processing, furniture processing, and finished furniture to add value and lengthen the supply chain on a scale of 10 hectares in Nam Dong Phu industrial park.
In addition, Kim Tin concentrates on developing and producing goods including alternative adhesive materials, abrasive materials, and specialty welding consumables while continuing to broaden its array of auxiliary industrial items. These new product factories will reportedly cost Kim Tin roughly 300 billion VND and start producing in 2023. These will serve as crucial "pullers" for the Group and the economy to continue growing in the future.
By NDH