Construction businesses are facing difficulties because of rising raw material prices

Ms. Nguyen Thi Huong – General Director of the General Statistics Office analyzed that if in the first and second quarters of 2023, the factor “increased raw material prices” most affected the production and business activities of enterprises, then in In the third quarter, with the efforts of ministries, branches and localities to stabilize construction material prices, the factor that most affects businesses is “no new construction contracts”.

Construction businesses are still very difficult

Forecasting that in the fourth quarter of 2023 compared to the third quarter of 2023, construction enterprises predict that production and business activities will improve with 26% of enterprises forecasting that production and business activities will be more favorable; 40% predict it will remain stable and 34% predict it will be more difficult.

Only 25.5% of construction enterprises said that their production and business activities in the third quarter of 2023 were more favorable than the second quarter, while up to 39.2% of businesses said that their production and business activities remained stable. determined and 35.3% of businesses identified production and business activities as more difficult.

Based on the balance index of production and business trends in the construction industry in the third quarter of 2023, it shows that, compared to the second quarter, this index is -9.8%. Commenting on the fourth quarter, research experts from the General Statistics Office said that the balance index of production and business trends in the construction industry will be better with an expected -8%.

Regarding production costs, 46.3% of businesses said that total production costs per unit of product increased in the third quarter compared to the previous quarter; 33.5% of businesses said there would be no change, 20.2% of businesses said the total production cost per unit of product would decrease.

Forecasting for the fourth quarter, 45.7% of businesses believe that total production costs per unit of product will increase; 38.4% of businesses forecast unchanged and 15.9% of businesses forecast a decrease in total production costs per unit of product – the survey results of the General Statistics Office clearly stated.

Considering the aspect of direct material costs, 49% of businesses think that this cost increased in the third quarter; 32.7% of businesses said it would remain unchanged and 18.3% of businesses said it would decrease. 47.8% of businesses forecast that this cost will continue to increase in the fourth quarter; 37.4% of businesses forecast no change and 14.8% of businesses forecast a decrease.

Similarly, regarding direct labor costs, 40.5% of businesses said costs increased; 42.1% of businesses shared that costs remained unchanged and 17.4% of businesses said costs decreased in the third quarter. 41.3% of businesses continue to forecast that direct labor costs in the fourth quarter will increase; 44.9% of businesses forecast no change and 13.8% of businesses forecast costs to decrease.

Regarding new construction contracts, in the third quarter, only 22.9% of enterprises had an increase in the number of new construction contracts compared to the previous quarter; While up to 49.3% of businesses said there was no change in the number of new construction contracts; 27.8% of businesses said the number of new construction contracts would decrease.

Ms. Nguyen Thi Huong said that it is forecast that in the fourth quarter, businesses will receive more new construction contracts than in the third quarter with 24.7% of businesses predicting an increase; 50.9% of businesses said there would be no change; 24.4% of businesses said the number of new construction contracts decreased.

Businesses need support in accessing capital

Survey results for the third quarter of 2023 show that 20.5% of businesses assess their operations to be below 50% of their actual capacity; 32.7% of businesses assessed their operational capacity from 50% to less than 70% of actual capacity; 28.3% of businesses rated their operational capacity from 70% to less than 90%; 16.3% of businesses rated their operating capacity from 90 to 100%; 2.2% of businesses assess that their operations exceed 100% of their actual capacity.

Regarding access to loans, the results show that 76.2% of businesses borrow capital for production and business and 77.7% of them borrow from banks; 11.7% borrowed from relatives and friends; 6.1% borrowed from other credit institutions; 2.9% borrowed from bank employees and credit institutions without going through official procedures; 1.6% borrowed from other sources.

Among businesses that have bank loans for production and business, only 26.4% of businesses have access to preferential loans; 73.6% of businesses cannot access preferential loans.

Ms. Nguyen Thi Huong said that, faced with this reality, to create more favorable conditions for production and business activities, construction enterprises have made a number of recommendations.

Of these, 47.1% of businesses requested capital support for production and business such as preferential loans, more convenient and faster loan procedures, and reduced lending interest rates; 45.7% of businesses requested support for raw materials such as ensuring supply and stabilizing raw material prices; 37.5% of businesses requested that bidding information should be public and transparent.

Along with that, 33.3% of businesses proposed to continue reducing administrative procedures; 24.7% of businesses requested to hand over the site on schedule to ensure the construction time according to the signed contract; 23.3% of businesses requested that there be sanctions to punish investors who are late in settling outstanding capital construction debts so that construction businesses can rotate capital for production and business activities.

In addition, businesses and construction contractors also believe that raw material prices have been controlled and stabilized, however, increased gasoline and oil prices have significantly affected machinery operating costs and transportation costs. transfer raw materials. On the other hand, the price of other raw materials such as sand, stone, and gravel increased due to tightened management policies on resource exploitation.

Therefore, businesses hope that the Government, ministries, branches and localities will continue to take timely measures to adjust and stabilize gasoline and oil prices; remove obstacles in sand, stone and gravel exploitation licenses to ensure supply and reduce costs.

Currently, the unit prices and norms of some works and projects using state budget capital have not kept up with market reality, so the construction progress and disbursement of public investment capital of projects and works slowed. Therefore, businesses believe that state management agencies need to review and update the norms of some projects in accordance with reality.

Reality also shows that the process of completing construction documents is still cumbersome, the construction process also involves many procedures; the coordination between state management agencies and investors is sometimes not tight and not timely, leading to interruptions in the construction process, so the contractor cannot ensure progress and quality.

Therefore, the contractors propose to extend the construction time without penalty for delay if the fault is not the contractor’s fault; at the same time, it reduces administrative procedures and gives specific instructions to investors to quickly complete construction investment documents and procedures so that contractors can focus on construction.