Seafood firms want access to forex loans until end-2013 ...

Fish processing is seen at a factory in the Mekong Delta. Given the wide gap of lending rates between Vietnam dong and foreign currency loans, VASEP is seeking central bank approval for an extension of the foreign currency lending deadline until late next year instead this year - Photo: Hong Van

Given the wide gap of lending rates between Vietnam dong and foreign currency loans, the Vietnam Association of Seafood Exporters and Producers (VASEP) has proposed the central bank extend the deadline for borrowing foreign currencies until late next year instead this year, said the VASEP chairman.
Tran Thien Hai said that VASEP members are in dire need of capital to maintain business, and given the numerous difficulties now, they should be allowed to take out foreign-currency loans until the end of next year.

The central bank on May 2 issued Decision 857/QD-NHNN extending the deadline of taking out foreign currency loans for seafood enterprises to December 31 instead of May 2 as regulated by the previous Circular 03/2012-TT-NHNN.

?However, the industry now is mired in difficulties in producing, processing and exporting aquatic products while lending rates of loans in Vietnam dong still stay high, at 11-13% annually,? Hai said. Therefore, the association has petitioned the central bank to continue the credit program until the end of next year.

Loans in foreign currencies, mainly in the U.S. dollar, come with an annual interest rate of only 7-8% per annum, Hai explained.

According to VASEP, the current high lending rates in Vietnam dong along with the tightened credit policy has driven many seafood firms into a tailspin. The number of companies scaling down operation and going bust is on the rise at the moment, the association said.

For instance, the country in this year?s January-September only had about 600 seafood firms active as exporters, shrinking by some 30% year-on-year.

The tendency is expected to continue as a result of surging production costs and volatile demand, Hai stressed.

VASEP predicts the industry will face more difficulties in 2013 if the capital shortage is not tackled in a timely manner.

The association forecasts imports of input materials for processing and exports in 2013 will jump by 30% over the year-ago period to an average of US$65-70 million a month. But seafood exports to a number of major markets are predicted to fall sharply, with the volume bound for European nations tumbling 12-15% year-on-year and that to Japan declining 1.5-2%.

The country?s seafood exports to other Asian nations, meanwhile, are said to mark up between 10% and 20% next year.

The Saigon Times Daily

Source: http://www.saigonmoney.com/2012/11/21/seafood-firms-want-access-to-forex-loans-until-end-2013/

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