Building material enterprises have been struggling with difficulties when the demand for construction materials decreased due to the strong influence of the weakening real estate market. With the Government launching new key transport projects in the second half of 2023, demand for construction materials is expected to recover slightly and be led by a wave of public investment. Analysts expect the building materials business to recover thanks to the accelerated disbursement of public investment capital.
Analyst Huynh Anh Huy, from ACB Securities Company Limited (ACBS), said that according to the plan of the Ministry of Transport, a number of key highway projects as well as the Ring Road 3 project will is expected to accelerate implementation in late June, in addition to the North - South expressway project which is being urgently carried out.
Up to 4 out of 5 key projects will be implemented in the southern region and are expected to help improve the transport network between major economic zones in the southern region. Key traffic projects in the second half of 2023 include: Ring Road 3 of Ho Chi Minh City. Ho Chi Minh City, the budget is 73,300 billion VND; Chau Doc - Can Tho - Soc Trang expressway (44,700 billion VND); Khanh Hoa - Buon Ma Thuot expressway (22,000 billion VND); expressway Bien Hoa - Vung Tau (17,830 billion VND); Ring Road 4 Hanoi (85,800 billion VND). The total investment for these 5 projects is more than 240,000 billion VND and will be gradually disbursed until 2025.
In fact, in the first half of 2023, the building materials industry market was strongly affected by the weakening of the real estate market leading to the stagnation in the construction of housing projects. This has led to a marked decrease in the demand for construction materials. However, with the Government launching new key transport projects in the second half of 2023, the demand for construction materials is expected to recover slightly and be led by a wave of public investment. in the context that the real estate industry has not shown many signs of strong recovery.
With positive expectations for public investment in the second half of 2023, ACBS also expects a recovery in business activities of building materials businesses. Given that the material consumption composition of infrastructure projects is different from that of housing projects, in which construction stone, cement, and asphalt account for a higher proportion, ACBS also expects businesses to Stone industry in the South region
Sharing the same view, Vietnam Joint Stock Commercial Bank for Foreign Trade Securities Co., Ltd (VCBS) said that the building materials industry, including construction stone, has benefited from infrastructure construction projects. For expressway construction costs, excluding compensation and site clearance costs, on average, stone costs account for 30-35%/construction costs, labor is approximately 40% and asphalt is about 40%. 15%, the rest is sandy soil.
According to VCBS, Vietnam currently has 22 airports. According to the new Planning Law, the Ministry of Transport has developed a draft master plan for the development of airports and airports nationwide to 2030 with a vision to 2050. Specifically, according to the Master Plan to 2030, it is expected to have more 6 Airports and by 2050 there will be 31 airports. VCBS said that two local airports, Bien Hoa Airport (Dong Nai) and Thanh Son Airport (Ninh Thuan), were proposed by the Ministry of Transport to become an airport.
On average, it is estimated that 1m² of airport road will use about 1m³ of stone. The demand for stone for public investment is very large while the supply of stone is very limited; up to 70% of stone demand comes from construction of infrastructure works. According to estimates of the Ministry of Transport, the demand for stone from 2023 - 2025 is about 21.5 million m³, Long Thanh airport phase 1 is more than 2 million m³, Ring 3 is about 5.2 million m... Investment Industry can be a "lifesaver" for construction materials enterprises, but in fact, the difficulties faced by enterprises in this industry are still not small.
According to information from the Ministry of Finance, the estimated payment of public investment capital from the beginning of the year to the end of May 31, 2023 is VND 157,095.4 billion, reaching only 20.8% of the plan (reaching 22.22% of the Prime Minister's plan). assigned by the Prime Minister). The disbursement rate of the capital plan for the first 4 months and the first 5 months of 2023 has even decreased slightly compared to the same period in 2022.
According to associations and associations of the building materials industry, to solve difficulties, it is necessary to promote public investment to reach 95-100% of the 2023 plan. At the same time, focus on opening capital flows for real estate. real estate, especially industrial and residential real estate and urgently simplify procedures for the package of VND 120,000 billion.
Leaders of Associations and Associations of the Building Materials Industry also proposed to reduce VAT 2% to 2024; land tax reduction by the end of 2023 and land tax debt by 2024 as well as timely import and export tax refund. Experts said that the frozen real estate market, the lack of capital for businesses, the lack of jobs, the high bank interest rates, and the high taxes compared to actual conditions have caused the construction materials market to almost stagnate.
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