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Construction companies increased exports of their services by 10% in H1 2017

Companies and Markets
18:21 | 09.08.2017 | Business-News

The exports of construction services in H1 2017 grew by 10% as compared to the last year and amounted to almost USD 84 million. The Minister of Architecture and Construction Anatoly Cherny told it at the press conference on the threshold of the professional holiday of the constructors.


The minister told that the exports of services to Russia are not limited to the housing construction. At the present time, a range of social infrastructure projects is being implemented there. For example, the Belarusian subcontractors are building a school in Pskov. This school should have been commissioned by September 1. 70% of the building materials were provided by Belarus. A block of houses is under construction in Kaluga Region. It includes five buildings, a school, and a kindergarten. The Belarusians are general contractors of this project.


"We worked this scheme through with the Development Bank. Belarus will grant a credit to build the school, and the Russian Federation will pay after the commissioning," Mr. Cherny told. "We earn as the general contractors. In spite of a 7.5% lending rate, the profitability allows earning and redeeming the credit."


The Ministry of Architecture and Construction plans to use this scheme actively next year. It underlines that the construction of social objects in the housing estates where the Belarusian companies construct residential buildings increase the housing attractiveness. It is important because the developers have to sell this housing by themselves.


"There are a few objects with the secured financing in Russia," Mr. Cherny explained. "We build and sell nowadays. The Russian partners lay networks and access communications while the Belarusian enterprises construct housing and sell the apartments at the expense of their working capital. It is a new approach, and we hope that we will sell these apartments. We have already sold about 40% of the apartments in the housing estates that are under construction now. We reckon on a full payback when the construction is over."


The Minister stated that the ratio of overdue external receivables as of July 1, 2017 amounted to 9.6% with planned 10%. These are proceeds that did not return to Belarus after 180 days. These cases were brought before the court.


The Ministry of Architecture and Construction plans to increase the exports in the field of building materials, too. According to the information of the Minister, the exports of main building materials (cement, glass, ceramic tiles, and break stone) in H1 2017 grew by 28%. The profitability of sales reached 25-30% by some positions.


The cement cost was reduced to the level of the European one thanks to the substitution of imported coal with peat. The Minister told that the Ministry is preparing a program of replacement of goal with RDF. It will allow decreasing the cement production costs even more.


The Minister also mentioned the Ukrainian market. The Belarusian cement and glass are actively exported to Ukraine. The Ministry of Architecture and Construction is satisfied with the rates of growth in exports of building materials to the neighboring country and is ready to increase them. "At year-end 2017, we plan to supply 300-400k tons of cement to Ukraine. We plan to deliver up to 1 million tons next year."


The Minister was not confused with the question of probable development of conflict with Ukraine due to this. He said that only Ivano-Frankovsk-based plant lobbies and that Belarus is going to certificate the products of this plant in order to allow it to deliver its cement to Belarus.


Mr. Cherny positively assessed the state of the Belarusian cement plants. "If it were not for the investment credits, the enterprises would have a better performance today," Mr. Cherny stated. "In H2, they will make a profit. Krasnoselskstroymaterialy has the lowest profitability of sales (14%). The other two plants have the much higher profitability of sales."


Nevertheless, the Ministry of Architecture and Construction asks to prolong the measures of state support for the cement plants so that they can repay the credits.


Speaking about the modernization plans, the Minister noted that the difference between the cost of the ton of cement and its market share was USD 50 when the Ministry prepared these plans. This difference is USD 10 now. "Therefore, it is difficult to serve the credits at this cement price in spite of the fact that the cost was cut twofold," Mr. Cherny stressed.


The construction and installation work plan was not performed in H1 2017 despite the investment growth. At year-end, the volume of construction and installation work should be 98% of the plan.


The investments include the funds of the state investment programs, external financial resources, as well as financing of housing construction. According to the Minister, Resolution No. 582 of the Government has already been ready. This Resolution develops Decree No. 240 of the President on State Support of Citizens when Constructing (Reconstructing) Accommodations. According to this Decree, it is planned to allocate about BYN 135 million to the recipient-oriented subsidization in the housing construction in 2017. It will be enough to commission 35-36k meters of housing and lay the groundwork for next year.


Besides, about BYN 27 will be spent to implement Decree No. 585 on Provision of Young Families and Large Families with Financial State Support. The cost of one square meter of housing with the state support should be BYN 842 before the end the year. It is BYN 804 at present.


The Ministry hopes that a 15% limit of building readiness will be canceled in order to attract the investors' funds that should stimulate the integrated house-building factory in the field of the commercial development. Besides, the Ministry of Architecture and Construction expects the real estate mortgage to come to the market in the short term. The mortgage lending mechanism can get to work within a year. One should work through just a mechanism of seizure of debtors' apartments by the banks.


The Minister did not specify the mortgage loan rate. He stated that the fee percent should be single-digit taking into account the reducing inflation and refinance rate.

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