Construction sector declines. Photo thitruongtaichinh.vn

HA NOI (Biz Hub)— Companies in the construction sector in the first five months of this year continued to meet many difficulties, especially in the materials and real-estate area, said the Ministry of Construction.

The total business and production value of the construction sector reached more than VND12.6 trillion (US$600 million) in May and VND57.814 trillion ($2.75 billion) for the first five months of this year, down 5.4 per cent year-on-year.

The results meet 35.9 per cent of full year targets, the ministry said.

The assembly sector's revenue was VND21.25 trillion ($1 billion), down 14.6 per cent over the same period last year - 34.2 per cent of the whole year target. Many key projects are still behind schedule, especially those involving electricity.

Meanwhile, the value of production in the industrial and construction material was VND23 trillion ($1.1 billion), a slight increase of 3.9 per cent year-on-year. This was 39 per cent of the whole-year target.

The construction material industry continues to face a difficult time in domestic and foreign markets, said the chairman of the Viet Nam Construction Materials Association.

Tran Van Huynh said that the industry last year faced an over supply when sales plummeted because of the inactive property market. He added that most companies did not operate at full capacity.

"The capacity of cement companies was 80 per cent, the pottery sector was under 70 per cent, construction glass was under 50 per cent and some of other sectors only 15 per cent," Huynh said.

In addition, he added, stockpiles of finished goods were at a high level - and coal and power costs have increased.

All of these obstacles have pushed many companies to bankruptcy and small companies have to merge with big companies to avoid losses.

"Massive uncontrolled investment is the main reason causing oversupply," said Huynh.

"Moreover, many companies still use out-of-date machines that cannot produce high-quality products with good designs and are harmful to the environment."

To solve the problem, the association has suggested re-planning the industry to balance demand and supply, applying new technologies to improve quality and design of products, using new materials that can save time and money, and using industrial waste and strengthening management.

Construction material production is considered a key industry in Viet Nam, contributing 7-8 per cent to the national gross domestic product.

Last year, the industry's turnover reached about VND190 trillion ($9.05 billion), of which 31 per cent was contributed by the cement industry. — VNS