According to the Vietnam Aluminum Association (VAA), the past decade has seen a doubling in the number of manufacturing facilities, production capacity, and total output in Vietnam. In 2024, total output is projected to reach nearly 1.5 million tons, worth $4.2 billion, marking year-on-year growth of 14.5 per cent in the former. Looking ahead, the domestic market scale is projected to expand to $4.53 billion this year, highlighting both strong momentum and the urgency for policy support to help the industry scale up sustainably and competitively.

Aluminum stands out as a sector brimming with growth potential in Vietnam. Yet despite its promise, the industry continues to face persistent challenges. To unlock its full potential, it urgently needs enabling policies that act as levers for accelerated growth.

Vast potential amid pressure

Addressing the Vietnam Aluminum Industry Business Forum 2025, Mr. Vu Van Phu, Vice Chairman and General Secretary of the VAA, highlighted the industry’s strong potential for breakthrough growth. By 2030, aluminum demand is expected to rise by 25 per cent, with construction and architectural aluminum forecast to grow the fastest, at around 13 per cent annually from 2024 to 2029. The Ministry of Construction estimates a 25 per cent increase in demand over the next five years, supported by policies aimed at reviving real estate investment.

Vietnam’s engagement in 17 free trade agreements (FTAs), particularly the RCEP and the EUVFTA, as well as comprehensive economic partnership agreements (CEPAs), offers major export opportunities. It also has comprehensive strategic partnerships with nine key countries, including China, Russia, the US, and Japan. With strong global demand, these factors present substantial opportunities for the aluminum industry.

However, the industry also faces notable challenges. Though Vietnamese aluminum is exported to major markets like the US, representing 25 per cent of export value, and China (14 per cent), Japan (11 per cent), and South Korea (10 per cent), domestic companies contribute just 20 per cent of total aluminum export value. Local producers are dealing with the impacts of geopolitical instability and a sluggish global economy. Export activity has slowed, while major markets such as the US, the EU, Japan, and Australia are tightening both tariff and non-tariff barriers, including environmental regulations.

The US market poses a special challenge. From June, the export tariff on aluminum sent to the country increased to 50 per cent, making market expansion extremely difficult. The risk of trade defense investigations is also rising, discouraging investment in production expansion.

Mr. Truong Minh Hai, Chairman of the Nam Hai Group and EuroHa, added that Vietnam’s aluminum sector remains weak in capital, workforce, technology, and product variety. Efforts towards green transformation and compliance with ESG (environmental, social, and governance) standards are hindered by unclear guidance, limited funding, and a shortage of skilled professionals in metallurgy, digitalization, and emissions control.

Vietnam’s capacity to produce high-grade aluminum is still at a low level, with aluminum electrolysis - the most critical stage - yet to be developed domestically. The industry continues to rely on imported raw materials, while longstanding overcapacity remains unresolved.

Many enterprises also lack familiarity with international law and export-import regulations, making it hard to access demanding markets. Participation in global trade promotion and exhibitions is a challenge, especially for small and medium-sized enterprises (SMEs) with limited resources.

Supporting growth through reform

To help aluminum businesses navigate current challenges, Mr. Phu stressed the importance of accelerating digital transformation, green transition, and ESG adoption, stabilizing product quality, and building a strong Vietnamese aluminum brand to boost market share and reduce reliance on imports.

He called for supportive policy adjustments, including reducing VAT, lowering the 5 per cent export tax, providing ESG implementation guidance, and expanding access to green credit. He also urged businesses to explore international markets, leverage FTAs, and learn from foreign-invested enterprises. Workforce development, especially in technical skills, remains vital for meeting industry demands.

According to Mr. Vu Ba Phu, Director General of the Vietnam Trade Promotion Agency (Vietrade), challenges often present opportunities. While the US tariff hike poses difficulties, it also compels much-needed industry restructuring. Without early transformation, Vietnam may lose competitiveness both at home and abroad.

The country ranks third globally in bauxite reserves, accounting for 12-13 per cent of the world’s total, providing a solid foundation for raw aluminum production. However, domestic refining remains limited, with only the Nhan Co Alumina Plant in operation, keeping the industry in an early stage of development.

Nonetheless, the prospects remain bright. Vietnam’s electricity costs are about 25 per cent lower than in many regional markets and one-third those of the EU, representing a key advantage in the power-intensive smelting process. ESG and CBAM (the EU’s Carbon Border Adjustment Mechanism) compliance costs are still relatively low. Meanwhile, domestic demand is rising, fueled by the country’s ongoing industrialization and modernization.

Vietnam enjoys strong export potential through its 17 FTAs. From 2019 to 2022, aluminum import tariffs in most FTA markets dropped to zero, with Israel and the UAE expected to follow by 2027. Mr. Phu from Vietrade emphasized that, beyond the US, Vietnam still has many viable markets. The priority is to strengthen branding and ensure consistent product quality.

He concluded that the industry must address longstanding issues such as weak branding, fragmented supply chains, inefficient production, and high costs. In the short term, Vietnam holds competitive advantages, but long-term success will require creating higher value-added products and building a trusted global aluminum brand.

Uniting forces

To support the development of Vietnam’s aluminum industry, Mr. Hai proposed piloting the Vietnam Aluminum - World (VAW) alliance. This could take the form of an alliance or joint venture between domestic companies with shared export ambitions, built on principles of unity and disciplined business practices.

The alliance would strengthen competitiveness by pooling capital, technology, talent, and experience while improving production efficiency. It would also help expand market access by jointly exploring promising export destinations and leveraging free trade agreements. Additionally, the alliance could reduce risks through shared market insights and streamlined trade procedures.

Mr. Hai suggested a specialization approach, with each enterprise focusing on its strengths to optimize resources, avoid redundant investments, and improve product quality - ultimately creating a complete value chain.

While acknowledging that sustainable success is never easy, he stressed the importance of taking the first step. A moderate-scale pilot of the VAW model could serve as a strategic foundation for building a stronger, more resilient Vietnamese aluminum industry.

He cited successful examples in the automotive and banking sectors, and noted that Taiwan’s enterprise alliances have proven effective in boosting exports. The roadmap would start by identifying potential members and setting up a legal and organizational framework, followed by pilot implementation, evaluation, and adjustments. Over time, the model could expand into a major platform supporting global market reach and positioning Vietnam as a hub for high-quality aluminum production with a strong national brand.