The domestic ceramic-tile industry, struggling to sell inventory during the economic slowdown, has urged the Government to impose stricter control over imported ceramic tiles.

Last year, the Vietnamese ceramic-tile industry generated about 400 square metres of products, becoming ASEAN's biggest tile producer, replacing Indonesia.

In early 2009, the ceramic-tile industry's production capacity was only 299 million square metres per year, accounting for only two-third of the capacity of Indonesia.

According to the local Ceramic Tile Contractors Association, as of September this year, the Vietnamese industry was capable of producing 416 million square metres of tiles. However, the prolonged recession at home and abroad has caused problems for the industry.

The association's chairman, Dinh Quang Huy, said the market's purchasing power had slowed down significantly because of the stoppage of many construction projects.

To cope with the higher volume of inventory, many domestic tile producers have had to cut their production capacity, and some have even stopped production for one or two months.

"On average, the tile industry is using only 70 per cent of its designed capacity," Huy said. "The amount of unsold stock continues to rise and is now worth VND3 trillion (US$142 million), double the figure in normal conditions."

In addition to the inventory problem, domestic tile producers have had to cope with other difficulties, including rising input costs and lack of capital. Many banks have recently applied credit-loosening policies, but few ceramic-tile companies were able to access bank loans at soft interest rates.

Many of them are paying loan interest rates that are 2.6 times higher than those in Indonesia and three times higher than those in Malaysia. Such challenges put domestic tile producers at a disadvantage, particularly from ceramics products made in China, which has an annual capacity of 9 billion square metres of ceramic products.

In the first six months, of the year, the total value of ceramic tiles legally imported from China climbed to US$30 million, accounting for 95 per cent of Viet Nam's total tile import turnover. The volume of illegally imported tiles from China was also large.

With such competition, the local industry, even with high exports of $300 million last year, has suffered a slowdown.

The tile association has sent two official letters to the Prime Minister and the Ministry of Construction, asking for tightening of tile imports and prevention of fraud and smuggling.