VietNamNet Bridge – The frozen real estate market is defrosting on the information about the disbursement of the VND30 trillion bailout, which has also revived the building material industry.

The cement output and consumption in the first quarters of 2012 and 2013

Recovering gradually

The latest report of the Ministry of Planning and Investment showed that 8,792 businesses which suspended the production, have resumed their operation over the last five months.

Most of them, 3,142 businesses, come from the wholesale, retail and automobile repair sectors, while 1,309 from the manufacturing industries and 1,475 are construction firms.

The revival of the enterprises coincides with the increase in the building material consumption in March and April reported by some steel manufacturers, SMC Cement, Vicem Hoang Thach, the Vietnam Cement Corporation, Vicem Cam Pha.

However, experts say that the recovery of building material manufacturers would be slower than the enterprises in other business fields because of the oversupply of 20-30 percent.

In the cement industry, for example, the production capacity is 68 million tons per annum, while Vietnam only needs 54 million tons for domestic consumption and export.

The Ministry of Construction has predicted that the total domestic demand would be 60-61 million by 2015, and the exports would be 10 million.

According to Do Duc Oanh, Secretary General of the Vietnam Cement Association, 20 percent of cement manufacturers had been on the verge of bankruptcy by early 2013, while some others had been sold to foreigners.

He also said that over 10 merger and acquisition deals were wrapped up in 2012, saying that the sale of the companies was the inevitable consequence of the unreasonable programming of the cement industry.

Steel mils which have been dragging their miserable existence, have also regained their consciousness on the good news about the government’s bailout worth VND30 trillion to rescue the real estate market.

The April’s bulletin of the Vietnam Steel Association (VSA) showed that the structural steel sales in April decreased by 6.77 percent over the month before.

However, analysts have pointed out that while the sales decreased in comparison with the same period of the last year, the output has increased. This means that steel manufacturers feel more optimistic about the market prospect, which has prompted them to speed up the production in anticipation of the real estate market recovery.

The bailout not a magic wand

While believing that the real estate market recovery would help revive building material manufacturers, analysts have warned that the VND30 trillion bailout is not a magic wand which can saves all the enterprises.

Dr. Dang Hung Vo, a real estate expert, said the financial support package cannot treat all the diseases of the market, while it would only helps increase the transactions to help clear the inventories.

Truong Anh Tuan, Deputy Chair of the Vietnam Real Estate Association, said the VND30 trillion package would be just enough for 30 enterprises. Meanwhile, according to Tuan, there has been no information about what would come next after the bailout. “The Resolution No. 02, Circular No. 07 and the State Bank’s Circular 11 do not mention the issue,” he said.

Therefore, real estate firms and building material manufacturers would have to struggle to rescue themselves to clear the inventories and try to survive until the day the real estate market heats up.

DDDN