Removing difficulties for the construction materials manufacturing industry

The construction materials manufacturing industry is facing many difficulties, with declining output and revenue, leading to the risk of affecting the growth rate of the industry as well as economic growth in 2024.

Removing difficulties for the construction materials manufacturing industry

Production line of Ha Long Float Glass Company Limited - CFG.

Consumption declines

According to Mr. Tran Anh Tuan, General Director of Vicem Tam Diep Cement Company: With the general fluctuations of the world economy as well as the domestic economy, since the beginning of the year, Vicem Tam Diep Cement Company has encountered many difficulties in product consumption. Production and business results in the first 6 months of 2024: Clinker production reached 501,557 tons, equal to 84.3% compared to the same period in 2023; cement production reached 564,775 tons, equal to 94% compared to the same period in 2023. Cement consumption output was 93.8% compared to the same period last year. The Company's profit in the first 6 months of the year is estimated to be a loss of 109 billion VND and is expected to lose 229 billion VND in 2024.

This resulted in the State budget payment in the first 6 months of the year reaching only 8.4 billion VND, equal to 87.9% compared to the same period in 2023. Difficulties in production and consumption of products also led to a 15% decrease in workers' salaries in 2023 and the first 6 months of 2024 compared to 2022.

The reason was determined to be that both domestic and foreign markets were shrinking. In addition, there was a strong trend of shifting the output of bagged cement to bulk cement, while bagged cement was an effective product line, so the production and business efficiency of the Company declined sharply.

The assessment of the Provincial Industrial Park Management Board also shows that glass and cement products are facing many difficulties in consumption due to large supply in the market; low domestic demand; increasing prices of electricity, coal and other input materials for production; stagnant real estate market, many construction projects have stopped operating.

In addition, cement enterprises are at a disadvantage when the export tax on clinker increases from 5% to 10%, and from January 1, 2023, the value-added tax law will not be applied. Therefore, in the first 6 months of the year, all factories operated at a low level, with only 2 factories operating at 100% of their machinery and equipment capacity, namely Duyen Ha Cement Factory and Vicem Tam Diep Factory; while 3 factories only used 50% of their machinery and equipment capacity.

Comrade Ngo Minh Kim, Deputy Director of the Department of Industry and Trade, said: Not only is the domestic market facing difficulties, but the export market, the cement industry in general and construction materials in particular, are also facing fierce competition, leading to a sharp drop in export prices. With the current situation of supply exceeding demand, the prices of cement, clinker, construction glass, etc. at many times cannot cover costs, leading to high inventory levels.

In fact, the Chinese real estate market has not shown any signs of recovery, Chinese cement is also in surplus and is expected to compete with Vietnamese cement in markets such as the Philippines, Central America, South Africa..., affecting Vietnamese export enterprises in general and Ninh Binh province in particular.

In the first 6 months of 2024, the province's cement - clinker export turnover reached 193.3 million USD, down 16.7% over the same period in 2023. Cement - clinker export turnover mostly decreased compared to 2023, such as: Vissai Joint Stock Company only reached 95 million USD, down 12.8%, Nam Phuong Investment and Trading Company Limited only reached 15.4 million USD, down 42.1%. There are even companies that have not had export orders since the end of 2023 until now, such as: Huong Duong Cement Company, Viet Lime Minerals Company Limited...

Boosting public investment

Analyzing the difficulties in the construction materials industry, Mr. Dinh Duc Huu, Deputy Director of the Department of Construction, said: Due to the impact of the world economy, the demand for construction materials in the province has tended to decrease; many infrastructure and housing projects are slow to develop, have to delay or postpone progress. Increased transportation costs increase the selling price of construction materials, combined with the increase in the import market, which has affected the construction materials market in the province.

To solve the difficulties of the construction materials manufacturing industry, Mr. Tran Anh Tuan, General Director of Vicem Tam Diep Cement Company, has proposed a number of measures to solve the difficulties of the real estate and housing market in order to increase domestic cement demand. At the same time, he hopes that the Government will have solutions for businesses to benefit from policies on taxes, exports, and support to reduce loan interest rates.

Mr. Tran Anh Tuan also said that the Government, ministries, branches and localities need to consider and manage the granting of new construction and expansion of production lines in areas and regions with high density of cement production lines or located far from raw material areas; have solutions to stabilize prices and supply of construction materials to stimulate domestic cement market demand; create conditions for businesses to access reasonable production materials...

One of the important solutions not only to remove difficulties for the construction materials manufacturing industry but also to promote socio-economic growth is that Ninh Binh province has been focusing on leading and directing all levels and sectors to research and organize the synchronous implementation of tasks and solutions to promptly remove difficulties and obstacles for the real estate market.

Currently, Ninh Binh province is also implementing 4 social housing projects, these projects are expected to provide 4,652 social housing units to the market when completed. Recently, the Provincial People's Committee also approved the 5-year housing development plan; Plan to implement the Project "Investing in the construction of at least 1 million social housing units for low-income people and industrial park workers in the period of 2021-2030" in Ninh Binh province.

Thus, the solution that Ninh Binh province is implementing is completely consistent with the general solution that the Ministry of Construction is proposing, which is to promote public investment, infrastructure, remove difficulties for the real estate and housing markets, increase the use of reinforced concrete overpasses for expressway projects, use cement soil reinforcement technology, increase the use of cement concrete roads for new rural and mountainous construction, increase the consumption of domestic construction materials...

To remove difficulties for production, Mr. Do Tuan Viet, General Director of Ha Long Float Glass Company Limited - CFG also hopes that: The Government, ministries and branches will soon adjust tax policies to ensure competitiveness with other exporting countries, specifically adjusting the export tax on clinker-cement products currently at 10% to 0% because this is a deeply processed product; amending the Law on Value Added Tax in the direction that clinker products are not subject to Clause 2, Article 5; so that clinker is subject to a 10% value added tax rate when exported as for domestic consumption and is deducted from input value added tax similar to cement products.

Article and photos: Nguyen Thom