Higher export earnings fail to enthuse producers

TN News

Email Print

Export revenues are up in several sectors garments, woodwork and seafood but producers are anxious that plunging profit margins and rising input costs might push them into the red.

For the textile and garments sector, export revenues surged 27.9 percent to nearly US$2.8 billion in the first quarter of this year, according to Vietnam Textile and Apparel Association. However, profits did not rise correspondingly, several enterprises confirmed.

Luong Van Thu, vice general director of garment firm Dap Cau, said: "In the current context, it is difficult to get profits of even 5 percent. If material prices continue to rise, the risk of loss is high."

Hikes in electricity and gasoline price as well as interest rates have also pushed input costs higher, Thu said. "Input costs have increased by more than 30-40 percent, while selling prices will go up by 10 percent at the highest. Garment firms have never been in such a difficult situation."

"We do not sign long-term contracts to avoid risks of input cost hikes. Earlier we used to sign contracts of six months upwards. Now, we only plan three months ahead."

The price rise of materials and services don't seem to be stabilizing in the near future, so the situation of garment firms in the coming months is going to become even tougher, he said.

The seafood industry, meanwhile, has earned more than $1.1 billion in export revenues in the first three months of this year, up 30.5 percent over the same period last year. However, Le Cong Duc, vice general director of the Vietnam Seaproducts Corporation, said firms were finding it difficult to avoid losses, let alone record profits.

He said seafood firms had orders from the US, EU and Japan, but prices of materials had nearly doubled since late last year. Besides, local material supply was also thinner as high input costs have hindered farmers from expanding production.

According to the Vietnam Association of Seafood Exporters and Producers, the supply of tra fish was only enough to meet 50 percent of export demand. The situation will get more serious in coming months, it said.

Bui Khiem Nhuong, a member of the management board of seafood firm Ha Long, said the higher input costs and difficulties in sourcing raw material had made firms lose interest in exporting.

"Production costs have increased by 20 percent, while profits were down 30 percent over last year. In fact, our earnings are not significant," he said.

His firm this year has only one export contract - 100 tons of tra fish to China, Nhuong said. "Because we can't earn much profit, we do not want to expand markets or seek material sources."

An industry insider said a lack of cooperation, and unsound competition among Vietnamese exporters had made it difficult to ask importers to increase their buying prices. "Now, some firms sell tra fish at $3 per kilogram, but some others, looking to recoup investment, had signed contracts at $2.8 per kilogram."

The woodwork industry is also going through a similar situation.

Nguyen Ton Quyen, secretary general of the Vietnam Timber and Forest Products Association, said many woodwork firms are seeing no profits despite high export revenues.

"We can't profitably manage production with the current increases in input costs. Many firms are planning to halt production to avoid losses," he said.

Firms are seeking domestic material sources at lower prices, but Vietnam's forestry acreage is too small to meet demand, he said. "We have no way to cut losses, other than by taking fewer orders from customers."

More Business News