Construction industry faces recovery opportunity

Construction businesses are facing a clear opportunity for recovery.

This opportunity appears when positive information about ensuring the progress of completing guiding documents at the same time as the Law on Land, the Law on Housing, the Law on Real Estate Business, as well as specific mechanisms applied to some localities will help solve difficulties in the supply of construction materials. The bottlenecks caused by legal difficulties of many real estate projects and the lack of supply of raw materials can soon be resolved. These are factors that make construction enterprises feel excited.

When forecasting the production and business situation in the third quarter of 2024, the percentage of construction enterprises that believe that operations will be more favorable than in the previous quarter has increased slightly, to 28.8%, higher than the 26.4% in the second quarter of 2024. The number of enterprises concerned about a more difficult situation also decreased slightly, from 30.7% in the second quarter, to 28.1% when looking at the third quarter of 2024.

Notably, 30.1% of businesses expect an increase in new construction contracts in the next 3 months, a fairly high increase compared to 24.1% in the second quarter of 20204.

The number of businesses concerned about contract reduction also decreased significantly, by 18.9% and 25.8% respectively.

This is the result of a survey by the General Statistics Office with 6,056 construction enterprises nationwide, operating in the field of civil engineering construction, specialized construction and construction of all types of houses.

Although there are opportunities for recovery, businesses are still facing significant difficulties. Up to 46.5% of businesses believe that the factor of “increased raw material prices” is and will affect their operations the most this quarter.

In the operations of construction enterprises, the cost of direct materials used for construction, such as fill soil, fill sand, construction sand, asphalt, etc., always accounts for the largest proportion of total production costs. Survey results show that in the second quarter of 2024, 47.3% of enterprises said that direct material costs increased compared to the first quarter of 2024. Meanwhile, 46.7% of enterprises predicted that direct material costs in the third quarter would increase compared to the second quarter of 2024.

This is also the reason why among the list of recommendations sent by construction enterprises to the Government, ministries, branches and localities, the top request is support for raw materials.

Specifically, businesses recommend that competent authorities quickly take measures such as granting new mines, increasing the capacity of old mines, or having plans to transfer part of the volume of raw materials from projects with later completion times to projects requiring early completion.

The second is the request for capital support for production and business. In particular, construction enterprises continue to propose sanctions to punish investors who are slow in settling outstanding construction debts to shorten the capital turnover time.

Third is the request for public and transparent bidding information. Although the Government has issued a decree guiding the implementation of the Law on Bidding, many businesses are still having trouble implementing the new law. Therefore, businesses recommend that ministries, branches and localities build more direct support channels such as answering questions, providing specific instructions on bidding processes and procedures, and resolving complaints in bidding. On the other hand, businesses recommend that there should be clearer regulations on sanctions for cases where competent authorities are lax in supervising and inspecting bidding, thereby making bidding public, transparent and equal for all businesses in the face of business opportunities...

It should also be mentioned that in the second quarter of 2024, up to 21.1% of enterprises operated at less than 50% of actual capacity; 33.3% of enterprises operated from 50% to less than 70% of actual capacity. The number of enterprises operating from 90% to 100% of production capacity accounted for only about 16.7%.

Thus, the opportunity for construction businesses to recover is there and not small, but everything is not completely favorable.

Source: https://baodautu.vn/doanh-nghiep-nganh-xay-dung-dung-truoc-co-hoi-hoi-phuc-d219274.html