Facing Financial Struggles: The Construction Materials Industry in Vietnam

The construction materials industry is facing significant financial pressures, with high investment rates and slow product consumption making it difficult for businesses to repay debt and interest on bank loans. The Ministry of Construction reported at a conference on June 15 that production enterprises, particularly cement companies, are struggling financially due to the large capital investments required for production projects. This results in high principal and interest payments in the early stages of factory operation, putting businesses under immense pressure to repay debts.

Moreover, inefficient production and losses in companies, particularly in the cement sector, have resulted in bad debts. In response to these challenges, Prime Minister Pham Minh Chinh directed the State Bank to review and adjust regulations on freezing, extending, and reducing bank interest rates for businesses to better align with their financial capabilities.

The Prime Minister also emphasized the need for businesses to strategically restructure their capital sources and reduce costs to ensure sufficient cash flow for debt repayment and production expenses. He encouraged enterprises to invest in technology and equipment to lower production costs, improve efficiency, and enhance competitiveness. Additionally, businesses were advised to streamline their sales channels, cut down on unnecessary costs, and expand their markets to increase exports.

Despite these challenges, the construction materials industry plays a crucial role in the national economy, with an estimated annual revenue value of nearly $47 billion USD, accounting for approximately 11% of the national GDP. The government is committed to supporting the industry’s sustainable growth by addressing financial challenges and promoting production efficiency through specific policies that incentivize the use of alternative fuels and materials in production processes as well as limit imports through tax policies and trade defense measures.