Vietnam - Seafood exporters find hard to hook tasty profits

Our peak time for production will come in July. If we fail to get access to loans to buy raw materials by that time, we’ll face high risks - Nguyen Tuan Anh General director of Ut Xi Seafood Company

A capital-thirsty seafood sector needs to cast its net further for funding. Vietnam Association of Seafood Exporters and Producers (VASEP) is pushing the government to provide capital to under pressure seafood firms, hurt by tightened lending controls.

VASEP petitioned the Agriculture and Rural Development Minister Cao Duc Phat to ask the State Bank to provide seafood companies with credits to maintain production and for commercial banks to reschedule their due loans to one to three months more.

VASEP is making a list of companies in desperate need of loans, especially those with export contracts but few raw materials. VASEP secretary Truong Dinh Hoe said 93 per cent of VASEP member companies needed bigger loans, with the lowest level being VND10 billion ($481,000) and the highest VND1.4 trillion ($67.4 million).

He said that although the lending rate had reduced to 14.5 per cent this year, few seafood businesses were able to access such affordable funds. In fact, seafood firms are currently borrowing at a crippling 15 to 19 per cent.

To make the matter worse, VASEP chairman Tran Thien Hai said 2012 may be an annus horribilis for seafood companies because the ongoing economic crisis might lead to a decline in global seafood demand and importing countries would impose stricter food hygiene and safety requirements. Hoe predicted that European Union’s demand for high-price items like shrimp and tuna would fall.

VASEP has raised concerns that Vietnam’s target of earning $6.5 billion in seafood export turnover this year, against $6.1 billion in 2011, is out of reach. Tran Van Linh, director of central Danang city-based Thuan Phuoc Company, said many small seafood companies in Vietnam faced bankruptcy.

Nguyen Tuan Anh, general director of Ut Xi Seafood Company, said farmers’ material shortages would affect the two big ticket export items tra fish and shrimp. “Our peak time for production will come in July. If we fail to get access to loans to buy materials by that time, we’ll face high risks,” he said.

This year’s export target for tra fish alone is $2 billion and to obtain it domestic businesses need 1.3 million tonnes of fish material for processing. According to the Can Tho City Seafood Association, Mekong Delta fish farmers have given up farming en masse, resulting in raw material shortages, while seafood processors faced capital shortages to buy fish from farmers.

Between January and March this year, the country’s seafood exports brought home $1.2 billion, up 9 per cent on-year.

Tuong Thuy | vir.com.vn

013

Business & Investment Opportunities 
YourVietnamExpert is a division of Saigon Business Corporation Pte Ltd, Incorporated in Singapore since 1994. As Your Business Companion, we propose a range of services in Strategy, Investment and Management, focusing Healthcare and Life Science with expertise in ASEAN. We also propose Higher Education, as a bridge between educational structures and industries, by supporting international programmes. Many thanks for visiting www.yourvietnamexpert.com and/or contacting us at contact@yourvietnamexpert.com