Exporters blame banks for lack of capital

TN News

Email Print

International coffee prices have risen nearly US$600 per ton over the last three months, but Vietnam's largest coffee producer says it has yet to reap the benefits.

Nguyen Cong Hoang, deputy general director of Vinacafe, said his firm didn't have the capital to buy coffee beans from farmers.

He said that while the firm should have been profiting big from the five-year price hike ($1,123-$1,700 per ton) on its commodity, Vinacafe factories were often short on materials.

Hoang said coffee processors depend on loans for more than 95 percent of their production costs, but that funding from banks had become increasingly difficult to access amid tightened lending policies.

However, Tran Thi Hong Hanh, deputy head of the State Bank of Vietnam's Credit Department, said there was no shortage of capital at commercial banks and that the central bank had asked credit organizations to support export businesses.

The only explanation she could give for the alleged lack of funding was that commercial loans might possibly be tied up in "procedures" and that the central bank had issued no regulations to tighten lending.

Nguyen Van Cong, deputy chairman of Vietnam Cashew Association, also said that cashew firms had been unable to access much-needed loans.

He said association members needed VND7 trillion to support local production and the import of raw materials needed at processing plants.

The industry plans to process 50,000 tons of cashew nuts from local farmers and 300,000 tons imported from Africa and Indonesia in the second half of this year.

"It is contradictory that prices are going up due to a bad season around the globe while local processors are in a huge shortage of capital," said Cong.

Cong said 80 percent of cashew businesses were small and medium sized firms that commercial banks were shying away from lending to.

He said the inability to borrow was adversely affecting the industry, its exports and its 150,000 workers.

The industry needs help from the government or its goal of $1 billion in export revenues for the year might not be reached, he added.

Tran Duc Tung, chief officer of Vietnam Pepper Association, also said his sector was suffering, despite higher prices.

Vietnam has exported $220 million in pepper so far this year, a 48 percent year-on-year jump. The industry plans to earn $440 million on the international market in 2010 compared to $338 million last year.

However, association members are worried they won't be able to fulfill contracts with their customers by the end of this year as they don't have enough money to collect pepper for their factories, Tung said.

He said some exporters had to accept low-priced orders with quicker payment guarantees just to stay above water, even while prices this year are forecast to skyrocket due to lower production in the world's six largest pepper exporters, including Vietnam and India in the number one and two positions respectively.

More Business News