Speaking at the New Economic Forum – VNEF 2025 on the afternoon of October 2nd, Hoa Phat CEO Nguyen Viet Thang revealed a noteworthy update: The conglomerate is in the process of investing in a railway steel production plant, set to commence operations in early 2027.
Behind this seemingly bold decision lies a paradox within Vietnam’s industrial landscape, which Thang refers to as the “chicken-and-egg” dilemma.
“Hoa Phat has approached numerous companies within the Mechanical Engineering Association… each year they require only 10-20 tons, while a typical batch of Hoa Phat steel is 300 tons. Producing exclusively for them would take several years to deplete the supply,” Nguyen Viet Thang illustrated. The scale of industrial production and domestic market demand for fabricated steel remains disproportionately small compared to production capacity.
Due to this uncertain demand, many investors and banks have raised skeptical questions: “What if the government doesn’t purchase from Hoa Phat?” Despite the conglomerate’s leadership expressing faith in state policies, the reality remains harsh.
“The government has a decree on procurement, but frankly, we haven’t received a single order to date,”
Thang candidly shared at the forum.
Nonetheless, the conglomerate remains steadfast in its plan, a move that underscores a strategic rather than impulsive decision.
The Calculation Behind the Bold Move
A deeper analysis reveals that Hoa Phat’s “gamble” is built on three key strategic foundations:
First, anticipating massive future demand.
The Railway Network Development Plan for the 2021-2030 period, with a vision to 2050, outlines the construction and upgrade of thousands of kilometers of railways, including the North-South high-speed rail megaproject. Once these projects are implemented, the demand for railway steel, particularly high-quality steel, will be enormous. Investing now is a proactive step to be ready when the market materializes.
Second, the first-mover advantage.
Currently, 100% of the railway steel used in Vietnam is imported. By becoming the first domestic producer, Hoa Phat will hold a unique advantage. If they can demonstrate product quality and competitive pricing, they are likely to be prioritized in public procurement bids. This strategy creates a “market entry barrier” for potential competitors.
Overview of Hoa Phat Dung Quat 1 Steel Complex of Hoa Phat Group.
Third, transitioning to high-tech steel.
This move is not just a standalone project but part of a broader strategy for Hoa Phat to shift from being the “king of construction steel” to a producer of high-quality, value-added steel products. A clear example is the contract signed with Primetals Group to supply a casting and rolling steel line with a capacity of 500,000 tons/year.
As stated by
Chairman Tran Dinh Long
, the goal is to “replace high-grade steel currently being imported.” This confidence was further emphasized by Mr. Long at the 2025 Annual General Meeting:
“With our determination, I am confident we will successfully produce these railway tracks. We commit to supplying all types of steel for the railway foundation.”
Clearly, investing in the railway steel plant, despite immediate risks, is a strategic move. The success of this venture now hinges not only on Hoa Phat’s production capabilities but also on the government’s implementation of clear and specific procurement policies, as urged by CEO Nguyen Viet Thang:
“Specific procurement details—costs, pricing, timelines—are essential for businesses to commit long-term.”
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