Vietnam - More orders come, bigger worries raised to exporters

VietNamNet Bridge – Seafood and garment exporters have confirmed that orders have come in rapid fire since the beginning of the year. However, this has raised the worry about the lack of materials and the production cost increases.

Resuming the production on February 15, the catfish of the Hung Vuong Seafood Company have been running at full capacity to be able to deliver goods on schedule. Duong Ngoc Minh, General Director of Hung Vuong, said many other seafood companies also have to gear up and increase the production shifts to fulfill the orders.

The importers from Europe, the US and the Middle East have come back because they have realized that Vietnam’s catfish is now too cheap.

“Hung Vuong has got the orders until the end of April, and we now dare not take any more orders for fear that we would not be able to fulfill all of them,” Minh said.

A report by the Vietnam Association of Seafood Exporters and Producers (VASEP) showed that Vietnam’s catfish export turnover reached $160 million in the first two months of 2013, up by 30 percent over the same period of the last year. The export price is UScent5-10 kilo, which has pushed the domestic input material price up to VND23,000 per kilo.

Garment companies have also reportedly got big orders so far this year. Pham Xuan Hong, Deputy Chair of the Vietnam Textile and Apparel Association (Vitas), said the world market has recovered, which has brought more orders, more jobs, stable income and less worries to workers.

Hong said 90 percent of garment companies have got orders until the end of June 2013, while 50 percent have got the contracts to ensure enough jobs until the end of the year.

Most businesses have confirmed the high demand from the US and Japan. A senior executive of Saigon 2 said the company has arranged more production shifts after signing a contract on making women’s kaki trousers from a Japanese importer.

The thing that makes garment companies excited is that most of the orders have the export price up by 10 percent in comparison with the last year’s ones. Especially, some companies have reportedly obtained better prices, 20 percent higher than the last year.

“Since orders are plentiful, we have the opportunities to require higher prices,” Hong said.

Orders come, worries raised

According to the Ministry of Industry and Trade, the garment export turnover in January 2013 reached 1.05 billion dollars, up by 28.4 percent over the same period of the last year. Vietnam hopes to obtain $19 billion in garments export turnover in 2013, a 15 percent growth rate over 2012.

Hung Vuong and many other fish export companies have confirmed that they dare not take too many orders for fear about the lack of materials and the input cost increases.

VASEP has estimated that the catfish output in 2013 would drop to 900,000 tons from the 1.2 million tons in 2012 due to the financial problems.

Minh also said that while businesses feel happy because the demand has increased again, they are facing the risk of lacking of materials, possibly of 30 percent.

“The material shortage may occur from the third quarter of the year,” he said.

Meanwhile, garment companies keep cautious about the implementation of the contracts. Toan said the export price has increased by 10 percent, but the input cost has increased by 10-15 percent.

SGTT

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