The Ministry of Construction is seeking support from the Government to ease difficulties for companies operating in the construction materials sector.
Due to high inventory, a number of them have had to slow down or halt their operations entirely
The ministry sent a detailed report to the National Assembly Economic Committee. The report prioritised certain areas of the construction materials sector.
Swollen inventories
In the report, the Ministry of Construction said, in 2011 and the first five months of 2012, constructions materials companies faced many challenges in production, sales and capital.
Due to high inventory, a number of them have had to slow down or halt their operations entirely, the ministry said, citing inventory figures of Vietnam Glass Association, Vietnam Building Ceramic Association and Vietnam Steel Association.
The country has seven companies that produce large glass plates with a combined capacity of 150 million square metres per year, but by late August their total inventory was estimated at 60 million square metres, equal to four-months output. Of the total, floating glass inventory accounted for 57 million square metres.
From last year to late August 2012, three out of four rolled and laminated glass firms halted operations, reducing output by 85% in these areas.
VIGLACERA, which has three glass production lines with a total capacity of 33 million square metres, was holding an inventory of 15.7 million square metres by August 30.
Ashlar facing stone inventory was around 60 million square metres, and around 40 production lines have been closed down.
Cement firms, which have been facing big losses include Tam Diep, Haiphong, Quang Son, Cam Pha, Ha Long, Song Gianh, Song Thao, Thang Long and Dong Banh.
Setting priorities
In a report, the Ministry of Construction recommended eight measures to save the construction materials industry, including restructuring of State-owned companies by selling their State-owned assets or buying their debts.
According to the ministry, cement, ceramics and adobe brick procurers should be included in the list to receive the Government’s support under Decree 13/NQ-CP, issued on May 10, 2012.
Banks have been asked to extend debt repayment for construction material firms as well as investors in housing projects for works that are still under construction.
The ministry added that the lending interest rate cut should stay in place to make credit available for businesses.
Other measures recommended were increased support from the State Bank of Vietnam and commercial banks to help businesses arrange payments in foreign currencies.
The ministry has also asked for a reduction of 50% in the VAT for households and individuals who are first-time home buyers and are buying low-income apartments smaller than 90 square metres, and which cost less than VND20 million (USD952.38). It is hoped that this will help increase the demand for construction materials.