Addressing challenges and obstacles to boost the production and consumption of cement, steel, and construction materials.
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The directive clearly states that construction materials, including cement, steel, tiles, sanitary ware, and building glass, play a crucial role in infrastructure, urban, and housing development in the country’s design and growth.
The production and consumption activities of construction materials impact macroeconomic stability, inflation control, economic growth stimulation, job creation for workers, and social security assurance.
However, in recent years, Vietnam’s construction materials industry has faced numerous challenges, with declines in production volume, consumption, and revenue, leading to potential impacts on the economy and the country’s industrialization and modernization process. Evaluations by ministries, sectors, associations, and enterprises in the industry indicate the following main difficulties:
Firstly, there is a gap between the mechanisms and policies for the sustainable development of the construction materials industry and practical realities. Policy responses have not been timely regarding emerging issues, international commitments in free trade agreements to which Vietnam is a member, and rapid developments in the production, business, and consumption activities of construction materials. Mechanisms and policies to support enterprises in the construction materials industry in applying science and technology have not been issued specifically.
Secondly, the cost of fuel, including coal, FO oil, compressed natural gas (CNG), liquefied petroleum gas (LPG), and electricity, has increased. Raw materials for producing construction materials, such as limestone, clay, cement additives; silica sand, limestone, and dolomite for glass; kaolin and feldspar for tiles and sanitary ware; and sand for producing non-burnt construction materials and steel inputs, remain challenging and are sometimes insufficient to guarantee stable production.
Thirdly, the domestic and export markets for construction materials face difficulties due to decreased global and domestic demand, disrupted supply chains, a slow-growing real estate market, delayed implementation of many construction projects and key infrastructure works, increased transportation costs, and reduced exports of clinker and construction materials due to price competition from large global manufacturers and technical barriers in export markets. The domestic market also faces intense competition due to a significant increase in imported products.
Fourthly, financial difficulties arise as enterprises in the construction materials industry, especially cement companies, have a high ratio of bank loans and credit institution debts. In the initial phase of operating a plant, enterprises must repay loans, along with high-interest rates, leading to substantial principal and interest repayment pressure. Due to the slow consumption of products recently, many enterprises have had to halt some production lines, resulting in challenging cash flows to repay bank debts and cover raw material and fuel costs for production. Many construction materials plants, particularly cement and steel production facilities, are inefficient and incur losses, leading to bad debts.
Fifthly, smuggling, trade fraud, and the production and distribution of counterfeit and imitation construction materials have not been thoroughly addressed.
Six Key Directives from the Prime Minister
To overcome these challenges and promote the production and consumption of cement, steel, and construction materials in the coming time, the Prime Minister requests that ministries, sectors, the People’s Committees of provinces and centrally-run cities, and heads of concerned agencies adhere to the following six key directives:
Closely follow practical realities and promptly respond with quick policy adjustments to emerging difficulties and obstacles. Strongly and resolutely lead and direct the production and consumption activities of cement, steel, and other construction materials.
Develop the construction materials industry to ensure efficiency and sustainability, meeting domestic demands and increasing exports of high-value construction materials to contribute to economic and social growth.
Approach and apply the latest scientific, technological, and managerial achievements, especially the Fourth Industrial Revolution, in production. Enhance product quality and diversify high-quality product varieties with high economic value to meet construction demands.
Use resources, energy, raw materials, and fuel efficiently and effectively in production. Practice economical exploitation of mineral resources and maximize the use of waste and by-products from industries, agriculture, construction, and domestic activities as raw materials, fuel, and additives in the production process, following the circular economy model. Minimize environmental impacts during mineral exploitation, processing, and construction materials production, aiming for green production.
Encourage and promote the participation of investors and economic sectors in investing in and developing construction materials.
Distribute the network of construction materials production facilities nationwide, considering the natural and social conditions of each region and locality.
Four Key Tasks and Solutions
Ministries, sectors, the People’s Committees of provinces and centrally-run cities, and heads of concerned agencies shall focus on implementing the following four key tasks and solutions:
On Mechanisms and Policies for Industry Development
Review mechanisms, policies, and institutions to encourage rapid and sustainable investment in the construction materials industry, serving the production and business activities of enterprises and contributing to the country’s socio-economic development.
Restructure debt repayment periods and adjust interest rates for borrowers, including enterprises in the construction materials industry, according to the law.
Issue preferential policies on utilizing domestic and industrial waste, such as fly ash and gypsum, as alternative fuels and raw materials in cement and other construction materials production. Strengthen state management in the field of construction materials, especially in the production and consumption of cement and steel.
On the Application of Science and Technology and the Industry’s Production Transformation, Especially Green Production
Proactively innovate and flexibly apply advanced technology, digital transformation, green transition, and circular economy to reduce production costs and improve productivity, quality, and product competitiveness.
On the Market
Strengthen the forecasting of domestic and international developments to proactively devise timely and effective solutions, providing enterprises with stable production and business orientations. Fight against smuggling, trade fraud, and counterfeit and imitation goods. Expand domestic and foreign markets.
On International Cooperation
Promote public investment in transport and irrigation infrastructure, urban and rural infrastructure, national defense and security works, and marine and island works serving people’s lives and the development of the marine economy…
Completing Mechanisms and Policies
The Prime Minister requests the Ministry of Construction to review and evaluate the implementation of the Strategy for the Development of Construction Materials for the period of 2021-2030, with a vision to 2050, approved by Decision No. 1266/QD-TTg dated August 18, 2020; the Program for the Development of Non-burnt Construction Materials in Vietnam until 2030, approved by Decision No. 2171/QD-TTg dated December 23, 2021; and other legal documents, programs, and projects related to construction materials to make appropriate adjustments in line with socio-economic development realities…
The Ministry of Construction shall take the lead, in coordination with relevant ministries and sectors, in reviewing and completing mechanisms, policies, standards, and technical regulations and implementing technical barrier measures for imported construction materials, especially tiles, sanitary ware, and building glass, ensuring compliance with WTO trade liberalization regulations. The Ministry shall also coordinate with ministries, sectors, and localities to focus on removing difficulties for the real estate market and promoting the implementation of the project to invest in the construction of at least one million social houses for low-income earners and other housing construction programs and projects.
The Ministry of Industry and Trade shall promptly submit to the Prime Minister for issuance the Strategy for the Development of the Vietnamese Steel Industry until 2030, with a vision to 2050. The field of construction steel needs to ensure a balanced supply and demand and sustainable development. Coordinate with the Ministry of Finance and relevant ministries and sectors to research and propose the completion of mechanisms and policies for the development of the construction steel sector, including tax policies (import tax, corporate income tax, etc.), investment attraction, and the formulation of national standards; decentralization and devolution in the management of the construction steel sector…
Creating Conditions for Enterprises to Invest in the Production of Construction Materials
The Ministry of Finance shall take the lead in drafting a Decree amending Decree No. 26/2023/ND-CP dated May 31, 2023, on Export Tax Rates, Import Tax Rates, Preferential Rates, and the List of Goods and Absolute Tax Rates, Mixed Tax Rates, and Import Tax Rates outside the Quota. Research and propose adjustments to apply an appropriate export tax rate on cement clinker to resolve the current consumption difficulties.
The People’s Committees of provinces and centrally-run cities shall encourage and create favorable conditions for enterprises to invest in producing high-quality domestic construction materials to replace imported ones, environmentally-friendly construction materials, and deeply-processed construction materials for export, in accordance with current mechanisms and policies. Create conditions for enterprises to invest in cement grinding stations and distribution stations in localities that cannot produce clinker but have additives and can utilize fly ash and gypsum from thermal power plants.
At the same time, localities shall promote public investment projects, social housing projects, transport and irrigation infrastructure development, and urban and rural infrastructure to increase the consumption of cement, steel, and other construction materials.
Reducing Production Costs and Product Prices
Construction materials enterprises must innovate and apply modern production technologies and management methods, improve productivity and quality, and reduce product prices. Review and cut production costs for raw materials, fuels such as coal, oil, gas, and electricity, and apply energy efficiency solutions in production. Utilize cheap energy sources from waste to reduce production costs.
Diversify construction materials suitable for different types of construction works and climatic and regional conditions. Increase the production of construction materials to replace imports to meet market demands. Seek and expand markets and promote the export of construction materials to many countries worldwide.
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