Construction materials companies face significant pressure to pay off debts

Businesses in the construction materials industry are facing significant pressure due to high investment rates and slow product consumption, making it difficult for them to repay debt and interest on bank loans. The Ministry of Construction reported at a conference on June 15 that construction material production enterprises, particularly cement companies, are struggling financially because of 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, slow product consumption has led many businesses to halt production on certain product lines, further complicating their financial situation. The Ministry of Construction noted that 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.

Overall, 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 Prime Minister urged ministries and localities to prioritize addressing the challenges faced by the industry and implementing measures to promote production and consumption of construction materials. Specific policies were also recommended to incentivize the use of alternative fuels and materials in production processes, as well as to support domestic production and limit imports through tax policies and trade defense measures.

In conclusion, the government is committed to supporting the construction materials industry and ensuring its sustainable growth for the benefit of the economy. By addressing financial challenges, improving production efficiency, and expanding market opportunities, businesses in the industry can overcome obstacles and thrive in the competitive market environment.