Building materials industry wants tax cuts

The Viet Nam Construction Materials Association has proposed that the Government consider a 5 per cent reduction in VAT from the current 10 per cent on building materials to help the industry counter increased input costs.

The association said that in the first quarter of this year, the prices of building industry materials including sand, stone and cement have risen significantly along with price surges of electricity, petrol and coal.

As building materials including construction glass, tiles, sanitary ware and cement have a high export value and rapid growth, the association also suggested the Ministry of Industry and Trade add building materials to the list of items that receive Government export incentives to boost exports.

The association said that the building materials industry has gained high export growth despite in reality taking meagre earnings. The industry’s exports this year are estimated to reach roughly US$500 million and the figure is expected to increase to $1 billion by 2015.

Under the proposals, the association also recommended the Ministries of Construction, and Science and Technology review and supplement the system of quality standards to protect domestic production against low quality imports.

The country’s building material sector has grown strongly over the past few years, with cement currently meeting domestic demand. Production output of construction glass, tiles and sanitary ware also reached roughly 107 million square metres, 300 million square metres and 3.2 million units respectively yearly.

After skyrocketing in March and early April, domestic steel prices have decreased faster than expected, according to industry insiders.

Domestic traders had to cut steel retail prices by roughly VND100,000 to VND300,000 per tonne due to the flood of low-price steel imported from China into the country.

Steel ingots on the global market have also decreased to roughly $400-450 per tonne compared to more than $600 per tonne in March.

The raw material is also expected to continue to decline by roughly $20-40 per tonne this quarter.

Steel retailers currently have had to sell their reserves to retrieve capital following a period of speculation, the insiders said. The country has seen chaos in the steel market since early March, following six surges in the domestic price of retail steel, from roughly VND12.4 million per tonne to more than VND16 million in just a few weeks. In addition to a rise in the global price of steel ingots, VSA chairman Pham Chi Cuong attributed the sharp rise on the domestic market to speculation.

Having just breathed a sigh of relief at the decrease in steel prices, construction contractors are facing a price rise in cement this quarter due to rising input costs and high demand. The Viet Nam Cement Association estimated that producers would have to increase their price by VND100,000-VND200,000 to offset rising input costs.

General Director of the X18 Cement Joint Stock Company Nguyen Van Kien said that his company had planned to raise the price of cement price by VND50,000 per tonne next month.

As the country is going through the construction season, cement demand is expected to increase, raising the price by roughly 4-5 per cent. — VNS

Tags: Vietnam Construction, Vietnam construction material industry