Capital shortage - headache for construction firms

Construction businesses have been undergoing difficult times. — Photo laodong.vn

HÀ NỘI — Domestic construction companies will continue to face difficulties in the second quarter of this year with capital shortage top of their problems, a report has revealed.

Up to 42.2 per cent of surveyed firms said they met more difficulties in Q1; 41.5 per cent said their business operation were stable and 16.3 per cent experienced better business in Q1, according to a General Statistics Office report.

In Q2, 27.1 per cent anticipated their business operation would be more difficult; 40.7 per cent expected stable business and 33.2 per cent foresaw better business performance compared to Q1.

Amid the current difficult context, 46.4 per cent of enterprises called on capital support such as preferential loans, more convenient and faster loan procedures, and reduced lending interest rates.

Meanwhile, 44.3 per cent suggested assistance in raw materials such as ensuring supply and stabilising raw material prices; 38.3 per cent expected that bidding information would be more open and transparent; and 32.9 per cent emphasised the importance of speeding up administrative reforms.

A Vietnam Report's survey also showed that 55.6 per cent of construction enterprises encountered difficulties in terms of working capital. Bank credit had been expanded, and interest rates had decreased, but construction firms, especially small and medium-sized, still found difficulty in accessing loans as their financial conditions failed to meet commercial banks' requirements.

Experts said that to ease the difficulties of the construction industry, it was necessary to solve some main problems such as reducing costs, improving the competitiveness of businesses and perfecting investment and business environment

Creating the favourable conditions for the firms to get bank loans and facilitating their market access should be also included, they said.

The nation's construction industry faced considerable challenges in 2023. Rising material prices, higher debt taken by builders, and dampened demand during the pandemic had all resulted in the downfall of hundreds of construction firms in the Vietnamese market in recent quarters.

To spur economic growth and development in the country, the Government had been increasingly investing in transport infrastructure. Several projects were completed in the second half of 2023, with many more planned to be finished over the next 2-3 years. These projects were expected to keep supporting the recovery of the struggling industry in Việt Nam over the short to medium term.