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Decorative paints & coatings market in SEA to grow to US$ 3.6 B in 2023

The optimistic economic conditions anticipated in most SEA countries are expected to cause these sectors to witness buoyant growth, thereby influencing the decorative coating market to upsurge at a CAGR of approximately 7.4% between 2019 and 2023, growing from approximately US$ 2.4 billion in 2019 to approximately US$ 3.6 billion in 2023.

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Definition / Scope

Decorative paints and coatings are primarily applied to civil structures such as buildings, residential and commercial spaces. These coatings are applied to giving a pleasant visual appeal along with increasing the durability of the structure. They provide protection to the surface from factors such as UV radiation, environmental conditions, weathering, rust, and chemical resistance.

Market Overview

The Southeast Asian (SEA) Decorative Paints and Coatings market size is projected to exceed US$ 3.4 billion by 2023 rising with remarkable CAGR of 7.4% during the forecast period 2018-2023 [1] The market for decorative paints and coatings in Southeast Asia has experienced steady growth historically. The decorative coating market in Southeast Asia is expected to fare well due to impressive growth in the construction industry-a result of the development of residential and commercial buildings as well as infrastructure [2].

Rising urbanization contributes to robust construction and infrastructure spending growth. Massive construction and infrastructure spending in SEA in 2016, 2017, and beyond as a result of rising urbanization is expected to drive the demand for coatings The optimistic economic conditions anticipated in most Southeast Asian countries, especially Indonesia and Thailand, are expected to cause these segments to witness buoyant growth, thereby influencing the coating market.

However, fluctuating raw material costs are expected to restrain market growth, as they severely affect margins in this price-sensitive market. Titanium dioxide is a key raw material in the coatings space. An increase in its price, due to supply shortages, is a major concern for decorative coatings companies.

Profit margins will remain under constant pressure if price increases continue. Suppliers will also be under constant pressure to develop coatings with an optimum price to affordability ratio.

The SEA Decorative Paints and Coatings market is highly competitive, with several international as well as domestic players present in the market which include AkzoNobel, TOA Paint (Thailand), Nippon, Jotun, Berger, Camel Paint, China Paint and others. Merger & acquisition of these local players by global companies is one of the key trend observed in the market.

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Key Metrics

Metrics Value Explanation
Base Year 2018 Researched through internet


Market Risks

  • Restriction of lead and other heavy metal usages in paints: The adoption of mandatory lead paint regulations, under the Industrial Products Standards Act, some countries have issued compulsory legislation that seeks to control the number of heavy metals in enamel-based paints and coatings used for decorative and construction purposes. Paints and coatings produced and sold are now required to have no more than 0.01% of mercury, lead, and cadmium, and no more than 0.1% hexavalent chromium in their dry weights. The restriction will add to the costs of paint and coating products.
  • Lack of skilled workforce for large-scale manufacturing: Another factor contributing to the restriction of the market is the shortage of qualified local talent resulting in an influx of skilled foreign labour to meet the current demand. Hiring and retaining qualified workers as well as enhancing the skills of the workforce are essential requirements for any large-scale manufacturer. The domestic labour shortage is expected to affect production plans and costs in the paint and coating industry in the forecast period.
  • Challenge of Continuous supply of resources: In an industry where raw materials comprise approximately 70.0%-80.0% of the costs of goods sold, a continuous supply of resources is a primary driver of long-term growth. This is ensured by way of fostering long-standing and close supplier relationships, a key advantage that is available to the existing large paint and coating manufacturers. Additionally, these existing manufacturers also have pricing contracts driven by their history of association with the participants in the value chain. For a new entrant, the absence of a robust network of suppliers and logistics service providers, and challenges in setting up commercially viable and attractive terms with domestic suppliers are likely to be time and money intensive serving as a significant barrier to entry in the paint and coating industry.

Top Market Opportunities

Factors that make the market attractive include demand for new housing and repainting, industry growth potential, increasing tourism activities and increased demand for premium products. Some of the key growth opportunities include:

  • Demand for new housing and repainting: Approximately 20.0%-25.0% of decorative paint and coating sales to the housing market relates to the painting of new houses while the rest (approximately 75.0%-80.0%) is used for repainting purposes. The demand for the new housing market is estimated at US$ 500 million in 2018 and projected to grow to reach 775 million over the forecast period. With new houses added to the total housing stock every year, the demand for decorative paints and coatings is expected to be primarily driven by shorter cycles of repainting activities such as repainting of interior and exterior walls.
  • Industry growth potential: The per capita paint and coating consumption can indicate the potential for market growth of the paint and coating industry across different SEA countries. As seen from the chart below, the average per capita paint and coating consumption was highest in Malaysia with 9.0 litres while it was lowest in Myanmar with 1.0 litres in the SEA region.
  • Increased tourism activities: Southeast Asian countries such as Thailand, Cambodia and Laos helped the retail market for decorative paints and coatings grow. Revenues from tourism increased by approximately 10% in 2018. Higher tourism spends are expected to boost growth in the hospitality sector, encouraging the development of hotels, in turn, could propel demand in the paint and coating industry.
  • Increased demand for Premium products: The high-income group dominates the customer segment for premium decorative paints and coatings. Sales of this category of decorative paints and coatings are mainly driven by the construction of high-end condominiums and villas, and their repainting as well. While growth in the overall construction industry slowed in 2015 and 2016, major ASEAN cities such as Singapore, Kuala Lumpur and Bangkok had a burgeoning luxury condominium market in both years offering higher potential for capital appreciation. Average prices for high-end condominiums in Thailand are range bound between US$ 3,000.0-US$ 5,400.0 per square meter, whereas prices of high-end condominiums in Kuala Lumpur generally are priced at approximately US$ 4,900.0 per square meter and could be as high as US$ 10,000.0 in Singapore. The high-end condominiums generally use the best raw materials from around the world for construction, interior design, and furniture. Growing demand for high-end, luxury residences are expected to boost demand for premium decorative paints and coatings, used in the painting of interior and exterior walls.
  • Growth in Modern Trade Distribution: The decorative paint and coating manufacturers have predominantly operated through traditional sales channel (through retail dealers) driven by a strong retailer dealer-producer/manufacturer relationship. However, with the rise of modern trade, paint and coating manufacturers are required to make additional investments in tinting machines and deployment of personal consultants (PCs) with the modern trade distributors. Although the rise of the modern trade channel is likely to result in downward pressure on margins in the short-term, this is also expected to result in greater retail consumer awareness and participation in the painting process. This, in turn, is likely to promote sales through the DIY channel as more consumers resort to visiting the modern trade outlet and make personal choices in consultation with the painter who accompanies them. By 2023 a rise in DIY channel sales is gradually expected to offset the margin pressures and is likely to augur well for paint and coating manufacturers.
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Market Drivers

Growth in the SEA decorative and paints coating market is driven by urbanization, increase in disposable incomes, new house constructions and repainting activities. Increased consumer preferences towards high priced paints and coatings in countries such as Thailand and Vietnam were also responsible for the historical growth rates. Government housing schemes and affordable-house building programs in Thailand, Indonesia and Malaysia also provided impetus to the market during times of economic slowdown and natural disasters [3].

  • Rising Urbanization and decreasing household sizes: The increasing urban population along with decreasing household sizes drives demand for more housing in city centres. Rising urbanization trend will contribute to the construction industry growth, thereby, bolstering the demand in the market. As the construction industry flourishes, the demand for decorative paint and coatings will increase in each country. Malaysia by 2025, almost 80% of the Malaysian population will live in urban areas, up from 74% in 2015, the highest urbanization rate among the developing ASEAN countries. This increase in urban population is expected to continue to be a significant driver for decorative paint and coating sales in the future.
  • Rising middle-class population and increasing disposable income: SEA is a growing market of about 620 million people with a combined GDP of about $3.5 trillion as of 2019. Rising population and necessity to lodge the expanding population across the globe is anticipated to be an important driver for Decorative Coatings Market by 2023. The Middle class in Southeast Asia is growing with surging urbanization and is projected to account for 65% of the population by 2030, thereby, spurring the demand for high-quality coatings. Higher disposable incomes and increased purchasing power of the population is likely to fuel long-term investments in real-estate and also drive repainting demand that was erstwhile deferred. Almost 75%-80.0% of paint and coating sales across key segments are from repainting activities resulting in it being a key driver for this industry in the forecast period. Indonesia, Vietnam and the Philippines have the largest population and also host fast-growing middle-class population, which will drive the demand for high-quality coatings.
  • Increasing expenditure on construction activities: Rising urbanization contributes to robust construction and infrastructure spending growth. Massive construction and infrastructure spending in SEA in 2016, 2017, and beyond as a result of rising urbanization is expected to drive the demand for coatings. In addition, due to rapid urbanization and strengthening economic, the SEA region is seeing increases in construction spending activities. The construction industry is projected to grow around 4-6% over the forecasted period.
  • Government housing schemes: Government efforts to improve and develop public infrastructure is one of the major market creators for the industry. Higher spending on infrastructure is expected to generate demand for decorative paints and coatings which contribute to the aesthetic and functional appeal, respectively, of public infrastructure. The retail market is also likely to benefit from this as many project owners and contractors purchase paint and coating products through retail dealers. The government of Thailand plans to invest THB1,411.6 billion between 2017 and 2022 towards 20 large infrastructure projects, mostly transport related, including railways, airports, marine logistics, and air freight.

Industry Challenges

The implementation of strict regulations by various government bodies has restricted the use of toxic organic chemicals used in the production of decorative coatings, which is expected to hamper the growth of the market. Consumers in Malaysia and Thailand are showing the increasing inclination towards eco-friendly coatings due to increased environmental awareness. Some of the other challenges faced by the sector today are:

  • The general perception about health and safety concern: The growing health and safety concerns with respect to various hazardous chemicals such as raw materials, intermediate products, and heavy machinery in the production chain, are posing risks to the environment and the health and safety of employees. To ensure both environmental and health and safety levels are not compromised, the industry participants generally try to obtain certain production certifications reflecting the overall implementation of such measures. ISO 14001 (certification for environmental management systems), ISO 50001 (certification for energy management systems) and ISO 17025 (requirements for the competence of testing and calibration laboratories) are several such certifications the decorative paint and coating industry in ASEAN chooses to comply with to meet quality standards.
  • Non-availability and high cost of raw materials: The fluctuating raw material costs are expected to restrain market growth, as they severely affect margins in this price-sensitive market. Titanium dioxide is a key raw material in the coatings space. An increase in its price, due to supply shortages, is a major concern for decorative coatings companies. Profit margins will remain under constant pressure if price hikes continue. Suppliers will also be under constant pressure to develop coatings with an optimum price to affordability ratio.
  • Adopting to the changing purchasing habits: Changing purchasing habits of consumers are playing a key role in the sales of paint and decorative market across ASEAN. Established paint and manufacturer companies by way of their expansive retail dealer reach are in touch with the “pulse of the market” enabling them to innovate and make changes for rapidly evolving consumer demands. Rapid innovation demands a strong research and development team to translate customer requirements into new sustainable products.

Technology Trends

  • The technology trend is moving towards 'green' as stricter environmental regulations; low VOC emissions, less usage of coatings and fewer coats are on demand among customers. The emphases of government are on climate change and environmental issues. For example, China announced a 45% cut in greenhouse gas emissions as well as 2 major objectives in increasing energy saving rates (up to 50% by 2010).
  • The Low-VOC, water-based coatings are the most popular sustainable coatings option among manufacturers. However, manufacturers are facing challenges in achieving an optimum balance for water-based coatings, in terms of film formation, hardness, and block resistance. The renewable raw materials are the second-most popular option while the manufacturers are always looking for less-expensive alternatives to produce paints. A popular renewable raw material among manufacturers is unsaturated vegetable oil due to its flexibility and availability.
  • UV/EB (ultra-violet/electron beam) curable coating is the also popular option since these require low storage space than solvent and water-based coating. Other options include anti-viral paints with the health and wellness theme and anti-reflective paints with cooling agents to ensure energy efficient home.

Pricing Trends

The production costs are highly sensitive to price fluctuations of raw materials used in the production of pigments, binders, extenders, solvents, and additives which are procured from both domestic and international suppliers. The raw materials comprise approximately 70.0%-80.0% of the costs of goods sold in the painting and decorative market. Approximately 15.0%-20.0% of raw material costs are attributed to oil derivatives, costs of which are based on global crude oil prices and susceptible to foreign exchange rates.

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Regulatory Trends

  • The ASEAN Economic Community (AEC) implemented on December 31, 2015, proposes the economic integration of ASEAN countries by facilitating a single market and production base, equitable economic development, integration in the globalized economy and formation of a competitive economic region. The major principles of AEC are the free flow of goods, services, investments and skilled labour. The membership in the AEC is beneficial to the paint and coating industry, primarily in aiding access to capital and labour from different ASEAN countries with an easing of rules, regulations and tariffs. For instance, a reduction in import/export duties is expected to help the paint and coating industry to reassess their future investment locations (in terms of optimized production costs).
  • The free flow of goods is likely to open up new markets for the existing production facilities of paint and coating manufacturers within the ASEAN. Moreover, integration of ASEAN’s trade with the global economy is expected to boost competition among paint and coating companies across the value chain, making it easier for paint and coating manufacturers to procure raw materials as well as provide them with access to skilled workforce globally.

Other Key Market Trends

The market is expected to be favourable on account of increased regulatory pressure and rising public awareness of environmental and health issues have created a greater demand for low-VOC (volatile organic compound) paints and coatings in recent years, leading to the development of a new generation of low solvent or solvent-free decorative paints and coatings in the Malaysian and Indonesian markets. Myanmar's investment commission currently requires the submission of environmental impact assessments while there is no ban on paints and coatings which are harmful (high-VOC) to the environment or human health.

Market Size and Forecast

The SEA decorative paints and coatings market size was valued at US$ 2.4 billion in 2018. It is anticipated to register a CAGR of 7.4% over the forecast period to reach US$ 3.46 billion by 2023 [4]. The growth of decorative paints and coatings market is driven by the by urbanization, increase in disposable incomes, new house constructions and repainting activities. Moreover, increased consumer preferences towards high priced paints and coatings in countries such as Thailand and Vietnam were also responsible for the historical growth rates. This trend is expected to hold for the years 2019 to 2023. The retail decorative paint and coating market in Thailand registered a CAGR of 6.9% between 2014 and 2018, growing from US$ 560 million in 2014 to US$ 660 million in 2018, while the market in Vietnam recorded a CAGR of 9.0% between 2014 and 2018, growing from US$ 230 million in 2014 to US$ 330 million in 2018. Similarly, the markets in the other countries of Southeast Asia such as Malaysia, Indonesia, Myanmar, Cambodia and Laos registered a combined CAGR of 6.4% between 2014 and 2018, growing from US$ 1,068 million in 2014 to US$1,414 million in 2018.

Key segments of the South-east Asia decorative paints and coatings market:

By Product type, the market can be split into:

  • Emulsions: The analysis of decorative coatings and coatings market for SEA shows the utility of primers, enamels and emulsions. Emulsions are high-quality paints used in indoor applications such as ceilings and surfaces. In 2018, the retail market for emulsions was valued at approximately US$ 967.2 million. The market for emulsion is projected to lead the product demand with CAGR of approximately 7.9% over the period 2019 to 2023 and is expected to reach US$ 1,414.5 million by 2023.
  • Enamels: The enamel coating is applied to certain areas of the stain and sensitive structure. In 2018, the retail market for emulsions was valued at approximately US$ 614.4 million. The market is estimated to reach US$ 864 million by 2023 registering a CAGR of approximately 7.1% over the period 2019 to 2023.
  • Primers: The primer is applied to form the base of the final coating. In 2018, the retail market for primers was valued at approximately US$ 280.8 million. The market is anticipated to reach US$ 391.73 million by 2023 registering a CAGR of approximately 6.9% over the period 2019 to 2023.
  • Others: Depending on the application, various paints and paints can be used. Cement paints, distempers are considered to be other types used for commercial and residential purposes. In 2018, the retail market for others was valued at approximately US$ 537.6 million. The market is expected to reach US$ 768 million by 2023 registering a CAGR of approximately 7.4% over the period 2019 to 2023.

By Application, the market can be split into:

  • Residential: The residential building segment is on strong growth in demand in 2018. The SEA’s growing middle-income class and its influx of foreign investment has resulted in rising demand for better quality homes and has also improved the upmarket property segment. The retail market for residential decorative paints and coatings is estimated to register a CAGR of approximately 8.1% over the forecast period of approximately USD 1 billion in 2018 to USD 1.5 million in 2023 [5].
  • Commercial: With a considerable number of foreign manufacturers setting up production bases in the region, demand is also on the rise for commercial properties, including industrial parks, warehouses and logistics facilities. The retail market for commercial decorative paints and coatings is estimated to register a CAGR of approximately 6.7% over the forecast period USD 1.5 billion in 2018 to USD 1.9 billion in 2023.

On the basis of technology, the market can be split into:

  • Water-Based Coating: The eco-friendly policy for lower levels of volatile organic compounds in paints have reduced the demand for solvent-based coatings, and unlocked the market for water-based coatings. The waterborne coatings are replacing the solvent-based decorative paints and coatings due to the use of flexible raw materials to achieve optimum balance in terms of film formation, hardness, and block resistance. The retail market for Water-Based Coating decorative paints and coatings is estimated to register a CAGR of approximately 7.9% over the forecast period USD 1.3 billion in 2018 to approximately USD 2 billion in 2023.
  • Solvent-Based Coating: The retail market for Solvent-Based decorative paints and coatings is estimated to register a CAGR of approximately 6.8% over the forecast period USD 1.1 billion in 2018 to USD 1.5 billion in 2023.


Geographically, the market can be split into:

Thailand:

  • Retail sales of decorative paints and coatings in Thailand are significantly influenced by the housing market. The retail market size in Thailand was valued at approximately US$ 560 million in 2014 and it reached a value of approximately US$ 660 million in the year 2018.
  • Driven by infrastructure led by investments and growth. CAGR of around 6.9% between 2014 and 2018.
  • In line with continual growth in public investments such as Infrastructure Investment Plan 2015-22 (~ US$ 76 billion), construction industry growth in Thailand to be led by infrastructure development

Vietnam:

  • Retail sales for decorative paints and coatings, which is approximately 50.0%-60.0% of total decorative paint and coating sales in Vietnam, are mainly driven by the construction and furniture industries alongside demand from public infrastructure developments.
  • The retail decorative paint and coating market grew at a CAGR of 9.0% between 2014 and 2018, growing from US$ 230 million in 2014 to US$ 330 million in 2018. The rapid growth over the years is likely to be attributed to heightened activity in the housing market as well as an improvement in overall economic conditions in the country.

Indonesia:

  • In 2018, the retail market for decorative paints and coatings in Indonesia was valued at approximately US$ 929.5 million. Historically, the market has grown at a CAGR of approximately 7.2% between 2014 and 2018 and is expected to reach US$ 1,433 million by 2023 registering a CAGR of approximately 9.0% over the period 2019 to 2023.
  • Urbanization and rising disposable incomes along with changing consumer preferences towards high-quality finishes are some of the major factors driving growth in the Indonesian paint and coating industry.
  • Between 2014 and 2018, large foreign companies, including Davies Paints from the Philippines and the Thailand-based TOA Paint (Thailand) Public Company Limited entered the paint and coating market in Indonesia, indicating positive growth of the market over the period 2019 to 2023.

Malaysia:

  • The retail market for decorative paints and coatings in Malaysia was approximately US$ 394.2 million in 2018 recording a CAGR of 5.0% over 2014-2018 mainly driven by an economic recovery, urbanization and increased number of new housing project completions.
  • The Malaysian construction sector accounted for 4.5% of GDP in 2016 with residential housing projects, which are among the major consumers of decorative paints and coatings, accounting for approximately 24.4% of total constructions.
  • The construction sector is forecasted to account for 5.5% in the year 2023, registering a CAGR of 5.0% over the period 2018-2023. Malaysia retail decorative paint and coating market is estimated to grow at a CAGR of approximately 5.2% over the forecast period to reach approximately US$ 508.3 million by 2023.

Myanmar:

  • The retail market size of the decorative paints and coatings in Myanmar was valued at approximately US$ 30.5 million in 2014. It reached a value of approximately US$ 39.5 million in 2018, recording a CAGR of approximately 7.1% between 2014 and 2018.
  • Growth in the retail market for decorative paints and coatings in Myanmar was mainly driven by construction of offices complexes, other commercial spaces and new houses developed around the previous two.
  • The decorative paint and coating market in Myanmar is estimated to grow at a CAGR of approximately 6.2% over the forecast period to reach approximately US$ 53.34 million by 2023.

Cambodia:

  • The retail market size for decorative paints and coatings in Cambodia was valued at approximately US$ 27.7 million in 2014 and it reached a value of approximately US$ 33.3 million in the year 2018; registering a CAGR of approximately 4.0% from 2014 to 2018.
  • The decorative paint and coating market is expected to reach US$ 43.3 million by 2023 recording a CAGR of approximately 5.4% over the period 2018 to 2023. The country’s proximity to Malaysia and Vietnam aiding in raw material imports, the maturity of the market and political stability in Cambodia are considered beneficial to the country.

Laos:

  • The retail market for decorative paints and coatings in Laos registered a CAGR of approximately 2.0% between 2014 and 2018, growing from USD16.5 million in 2014 to USD18.4 million in 2018.
  • The historical growth rate of the retail market for decorative paints and coatings in Laos was considerably lower than Myanmar as Laos received international support in the form of developmental aids from countries such as China and Vietnam.
  • The decorative paints and coatings in Laos to grow at a relatively slower pace (as compared to the other countries in SEA) from 2019 to 2023, registering a CAGR of approximately 3.5% over the forecast period to reach approximately US$ 21.9 million by 2023.
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Market Outlook

  • The SEA Decorative Paints and Coatings Market is forecast to register a healthy growth of CAGR 7.4% reaching US$ 3.46 Billion in value terms by 2023. The retail paint and coating industry which is a significant channel of sales for the manufacturers is likely to see increased off-take as consumers become more aware of the choices offered to them. This segment is expected to see moderate to high growth in the forecast period, driven by an increased demand for new housing and repainting, government incentives and rising retail spending to name a few. Increasing disposable income is also expected to result in greater discretionary spend including a preference for premium paint and coating products which is likely to open up newer markets for existing paint and coating manufacturers.
  • Renovation of buildings, both residential and commercial, repainting of vehicles using premium paints as a reflection of status symbol and maintenance activities in small factories are expected to be key contributors of repainting demand in the forecast period driving the retail paint and coating industry back on its growth trajectory.

Thailand:

  • Although Thailand experienced significant economic and political turmoil in the early part of this decade, the country is on a growth trajectory since 2016.
  • The construction industry, a key indicator of economic progress is reaping the benefits resulting from the macro-economic factors. Additionally, a combination of socio-economic factors such as an increase in nuclear households driven by a reduction in the size of the family, rising urban households due to urbanization is promoting the growth of residential houses in the country.
  • Driven by the various factors as discussed, the retail market for decorative paints and coatings is expected to grow at a CAGR of 5.1% between 2019 and 2023, increasing from US$ 700 million in 2016 to US$ 860 million in 2023.

Vietnam:

  • Vietnam has been on a growth trajectory since 2014 and is expected to continue the momentum in the forecast period, mainly driven by stimulus from the government’s long term growth strategies.
  • The rapid growth of the country’s economy, coupled with the young and large population is also likely to be a key growth driver in the forecast period.
  • The retail market for decorative paints and coatings in Vietnam is forecast to record an even higher CAGR of approximately 9.9% over the forecast period of 2019 to 2023, growing from approximately US$ 330 million in 2018 to approximately US$ 544 million by 2023 as positive macroeconomic conditions continue to drive construction activity in the country.

Rest of the SEA countries:

  • The retail decorative paint and coating market for Malaysia, Indonesia, Myanmar, Cambodia and Laos combined is likely to surge from the 2018 level of approximately US$ 1,414.9 million to approximately US$ 2,059.8 million by 2023, witnessing a compound annual growth rate (CAGR) of approximately 7.7%.
  • A rise in disposable income, increasing urbanization, development of the construction and infrastructure industries and launches of new products is expected to fuel the paint and coating industry’s growth in these five countries.
  • The outlook for the decorative paint and coating market in Malaysia is expected to remain fairly positive, driven by the change in consumer demands with high standard of living and rapid development of commercial and residential buildings supported by the significant increases in development expenditure (approximately 16.2% increase from previous plan) in the 11th Malaysia Plan (2016-2020).
  • Growth in the Indonesian decorative paint and coating market is expected to continue on its upward trajectory owing to the rapid infrastructure developments, increased FDI and increased tourism, coupled with the establishment of economic development zones.
  • With the opening up of Myanmar, Laos and Cambodia’s economies in recent years and the expected construction boom that is likely to be a result of this liberalization, the near-term (2018-2023) outlook for decorative paint and coating market in these countries is expected to be positive.
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Technology Roadmap

  • Digitization is set to stimulate growth in this industry as the country’s young demographic increasingly leverages technology to make purchase decisions including choosing the paint texture and special effects for their house interiors.
  • Growing awareness through digital media among customers about the origins of products, the safety of ingredients, and their environmental friendliness is also likely to influence the paint and coating industry.
  • Companies that are able to cater to the evolving tastes and preferences of retail and B2B consumers are likely to reap significant benefits during the forecast period of 2019-2023.

Distribution Chain Analysis

  • The decorative paint and coating manufacturers generally rely on large international chemical manufacturers such as Dow and BASF for the majority of their raw material requirements.
  • The sales channels in different countries depend on the available infrastructure and maturity of the local market. In countries such as Thailand, Indonesia and Malaysia paint and coating manufacturers sell directly to modern trade distributors as well as to traditional retail dealers, whereas in countries such as Vietnam, Indonesia, Cambodia, Myanmar and Laos, the paint and coating manufacturers sell directly to traditional retail dealers or wholesale distributors who in turn sell to the retail dealers.
  • Apart from selling to retail dealers, wholesale distributors and modern trade distributors, paint and coating manufacturers also sell their products directly to project owners and contractors. Housing project owners and infrastructure contractors in Thailand, Malaysia and Indonesia procure decorative paints and coatings directly from the manufacturers, while in Vietnam, Myanmar, Cambodia and Laos wholesale distributors act as third parties between paint and coating manufacturers and project owners.
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Competitive Landscape

  • The SEA Decorative Paints and Coatings market is highly competitive. The industry has seen many mergers and acquisitions over recent years. The presence of global players operating across the globe makes this market appears highly competitive. Multinational paint and coating companies such as AkzoNobel and Nippon Paints are playing an increasingly important role in the Indonesian and Malaysian decorative paint and coating marketplace; whereas local manufacturers such as UPG in Myanmar have a strong foothold in the decorative marketplace.
  • Due to factors such as price wars, the volatility of the local currency and international oil prices the level of competition among the companies in this market space will further intensify during the forecast period of 2019-2023. Akzo Nobel manufactures paints and coatings and at the same time, it is involved in the production of raw materials, such as resins.
  • The Southeast Asian Decorative Paints and Coatings industry is highly fragmented, with many brands competing. For example, the retail decorative paint and coating market in Thailand was dominated by TOA Paint (Thailand) Public Company Limited. Other leading companies having a significant presence in this market are the subsidiaries of larger foreign paint and coating manufacturers such as Beger Co., Ltd, Akzo Nobel (Netherlands), Jotun (Norway) and Nippon (Japan). Most of these companies are inclined towards industrial paint and coating manufacturing and have less presence in the retail decorative paint and coating market.

Competitive Factors

  • Existing leading paint and coating manufacturers have a strong brand-recall status in the minds of the retail consumer by way of their proven track record and established market presence. Traditional retailers also prefer to stock products of established manufacturers as it gives them better margins by way of a relatively shorter shelf-time in comparison to lesser known brands.
  • The companies are increasingly following strategical alliances such as acquisitions and product expansions in new locations to improve their market positions. For instance, in November 2018, AkzoNobel acquired Malaysia’s Colourland Paints business thereby strengthening business in Southeast Asia. Additionally, the major players are also focusing on strengthening their product portfolio by acquiring small and local brands.
  • Key competitors in the SEA region are large global paint and coating manufacturers such as Akzo Nobel, Nippon and Jotun among others. The competing domestic paint and coating manufacturers are Beger, China Paint and TOA paint. To stay ahead of its competitors, the Company has invested in research and development over the years. The TOA Company was the first paint and coating manufacturer in Thailand and SEA to adopt Acrylic Technology in 1979 and used antimicrobial technology & odor control in its paints and coatings from 2002 before making a switch to ultra-low VOCS (Volatile organic compound) technology.

Key Market Players

The key players in the SEA Decorative Paints and Coatings market are AkzoNobel, TOA Paint (Thailand), Nippon, Jotun, Berger, Camel Paint, China Paint and others. The domestic manufacturers will continue to collaborate with global players to develop high-end products for local consumers.

Company Profiles

  • Akzo Nobel: Akzo Nobel N.V. operates as a paints and coatings company worldwide. The company offers decorative paints, including paints, lacquers, and varnishes; a range of mixing machines and color concepts for the building and renovation industry; and specialty coatings for metal, wood, and other building materials primarily under the Dulux, Coral, Levis, and Flexa brands [6].
  • TOA Paint: TOA Paint (Thailand) Public Company Limited, together with its subsidiaries, manufactures and distributes paints and chemicals in Thailand and Southeast Asia. The company offers construction chemicals, special paints, and hardware and power tools, as well as decorative, wood, and heavy duty coatings. It also provides staffing services [7]
  • Nippon: Nippon Paint Holdings Co., Ltd. manufactures and sells various paints and coatings in Japan, Asia, North America, Europe, and internationally. The company offers automotive coatings, such as paints for use in bumpers and plastic components; trade-use paints for homes, buildings, and bridges; and industrial coatings that are used in a range of products, including construction and farming machinery, exterior building materials, office equipment, and household electrical appliances [8].
  • Jotun: Jotun Paints Ltd. produces, markets, and sells decorative paints, marine coatings, protective coatings, and powder coatings. It offers decorative and woodstain products; marine coatings to prevent corrosion and fouling on vessels; protective coatings for energy applications, hydrocarbon processing industry, airports, buildings, bridges, offshore, and storage tanks; and powder coatings for architectural, functional, industrial, and color and texture applications [9].
  • Berger: Berger Paints India Limited manufactures and sells paint products for home, professional, and industrial users in India. It offers interior wall coatings, including designer finishes, interior emulsions, and interior wall distempers; exterior wall coatings comprising exterior emulsions and texture finishes; metal and wood paints; and undercoats, such as putty, interior, exterior, and metal primers [10]
  • Camel Paint: Camelpaint (China) Company Limited provides inventory handling services. The company is based in Hong Kong. Camelpaint (China) Company Limited operates as a subsidiary of National Lacquer & Paint Products Company, Limited [11].
  • China Paint: The China Paint Manufacturing (Shenzhen) Co., Ltd. engages in the manufacturing and sale of paints and paint products. Its products include paints for building, wood and metal painting applications. The company was founded in 1991 and is based in Shenzhen, China. The China Paint Manufacturing (Shenzhen) Co., Ltd. operates as a subsidiary of CNT Group Ltd [12].

Strategic Conclusion

The decorative paints and coatings industry is subtle to Gross Domestic Product (GDP) growth and tends to grow at 1.5 to 2 times that of Southeast Asia's GDP. The market is expected to fare well due to the impressive growth in the construction industry, a result of the development of residential and commercial buildings as well as infrastructure. The decorative paint and coating markets in Malaysia, Indonesia, Myanmar, Cambodia and Laos show a positive outlook on the backdrop of increasing urbanization, economic reforms, spending towards infrastructure, rising disposable income, among many others. Moreover, raising awareness about durable coatings and environmental concerns are expected to raise the demand for eco-friendly based decorative coatings which in turn is predicted to fuel the demand for decorative coatings over the forecast period, 2019 to 2023.

References

  1. https://market.sec.or.th/public/ipos/IPOSGetFile.aspx?TransID=133706&TransFileSeq=52
  2. https://www.frost.com/prod/servlet/cpo/5804032
  3. https://ww2.frost.com/index.php?news_category=All+Categories&news_language=English&news_type=Market+Research&cID=11607
  4. https://market.sec.or.th/public/ipos/IPOSGetFile.aspx?TransID=133706&TransFileSeq=52
  5. http://www.mypma.org.my/downloads/events/agm-0416/FS_MPMA_Presentation_120416.pdf
  6. https://www.bloomberg.com/research/stocks/private/snapshot.asp?privcapId=325843
  7. https://www.bloomberg.com/research/stocks/private/snapshot.asp?privcapId=5750747
  8. https://www.bloomberg.com/research/stocks/private/snapshot.asp?privcapId=874407
  9. https://www.bloomberg.com/research/stocks/private/snapshot.asp?privcapid=5706759
  10. https://www.bloomberg.com/research/stocks/private/snapshot.asp?privcapId=9272718
  11. https://www.bloomberg.com/research/stocks/private/snapshot.asp?privcapid=118145846
  12. https://www.bloomberg.com/research/stocks/private/snapshot.asp?privcapid=30660848

Appendix

List of abbreviations

  • CAGR: Compound Annual Growth Rate
  • SEA: Southeast Asian
  • US$: United States Dollar
  • UV/EB: Ultra-violet/electron beam


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