8 construction materials associations 'call for help' due to output congestion

Consumption declines, businesses face difficulties

Speaking at the seminar "Construction materials market - bottlenecks and solutions" held on June 10 in Hanoi, Mr. Le Quang Hung, former Deputy Minister of Construction , Chairman of the Vietnam Concrete Association, said that real estate is the leading economic sector of dozens of other manufacturing industries, but now new supply and liquidity have decreased sharply, causing the market to fall into a "frozen" state, making businesses difficult.

At the same time, public investment, which is considered a driving force for private investment development, is currently disbursed very low. According to the Ministry of Finance 's report, the disbursement rate of public investment capital in the first 4 months of the year reached nearly 14.7% of the annual plan. This level only reached nearly 15.7% of the plan assigned by the Prime Minister and was lower than the same period in 2022 (18.48%). It will be very difficult to have a breakthrough in GDP growth in the second quarter.

Some construction materials associations said that output congestion is putting businesses at risk of bankruptcy and mergers...

Mr. Pham Van Bac, Director of the Materials Department (Ministry of Construction), said that the economic recession has led to a sharp decrease in the consumption of many construction materials. "Following the industry for the past 20 years, I have seen that construction materials production has developed quite strongly, with output exceeding domestic demand by 10-30%. I suggest that businesses reduce production output to match demand and reduce inventory," Mr. Bac said.

Mr. Dinh Quoc Thai, Vice President of the Vietnam Steel Association, said that in the first 4 months of the year, production and consumption of many types of steel decreased sharply compared to the same period in 2022. It is forecasted that Vietnam's steel production in 2023 will increase by 2-3% compared to 2022, but the market is still complicated and unpredictable, and the price of steel raw materials is still fluctuating...

Meanwhile, Mr. Luong Duc Long, Vice President and General Secretary of the Vietnam Cement Association, said that in 2022, cement production and consumption decreased compared to 2021; in the first 5 months of 2023, cement production and consumption have not improved much. Meanwhile, the cement industry is facing difficulties: fuel prices (coal, electricity, etc.), transportation increased but market demand decreased sharply, output was blocked, causing product backlog, capital increased, etc., causing more difficulties for businesses.

Boosting public investment, unlocking capital for real estate

Mr. Long proposed to remove the industry's output bottleneck by increasing the construction of housing (especially social housing), urban areas, roads, etc., especially roads in the southern provinces to both create output for products and have convenient infrastructure.

Many housing construction projects have stopped or are operating at a standstill, causing congestion in the output of construction materials.

Mr. Dinh Quang Huy, Chairman of the Vietnam Construction Ceramics Association, said that before 2021, the industry had achieved strong development steps. In 2020, the capacity reached 800 million ^m2 of tiles, 24 million sanitary ceramic products; annual revenue of over 80,000 billion VND...

But from 2021 to now, the production and business of construction ceramics have decreased by about 30 - 35%. Especially in 2022 and the first quarter of 2023, the construction ceramics market is almost paralyzed in production and circulation. On average, from 2021 to now, production has only reached 50 - 60% of investment output; but the domestic inventory rate is up to 20%, forcing businesses to continuously reduce production.

According to Mr. Huy, one of the main reasons is the stagnant real estate market. On the other hand, the Covid-19 pandemic has disrupted the supply chain, so exports have also encountered many difficulties. Meanwhile, bank interest rates and taxes remain high compared to actual conditions... leading to many businesses being at risk of bankruptcy.

Discussing at the seminar, many recommendations suggested that there should be solutions to support the recovery of the real estate market to increase demand; promote public investment to reach 95 - 100% of the 2023 plan; focus on unblocking capital flows for real estate; simplify procedures for the VND 120,000 billion package so that people can easily access loans in a timely manner and businesses have operating capital; reduce 2% value added tax until 2024; reduce land tax until the end of 2023, and grant land tax debt until the end of 2024; reduce bank loan interest rates...

8 associations including: Vietnam Association of Building Materials, Vietnam Cement Association, Vietnam Concrete Association, Vietnam Steel Association, Vietnam Construction Ceramics Association, Vietnam Glass and Crystal Association, Vietnam Roofing Association, Vietnam Association of Bridges and Roads Science and Technology, Institute of Building Materials, Eurowindow Joint Stock Company jointly organized the seminar "Building Materials Market - Bottlenecks and Solutions".

The seminar aims to evaluate the production and consumption of major construction materials, multi-dimensional analysis of bottlenecks, and solutions to unblock the consumption market.

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