Vietnamese seafood companies have once again requested that the central bank delay by one more year a plan to tighten restrictions on foreign currency lending.
The Vietnam Association of Seafood Exporters and Producers (VASEP) said the move would enable its struggling industry take advantage of the lower interest rates available by borrowing US dollars instead of dong.
Since the interest rate margin between borrowing dong and US dollars is "quite large," the VASEP has continually asked the State Bank of Vietnam to extend the effective date to the end of 2013, said Tran Thien Hai, chairman of the association, quoted by thesaigontimes.vn.
According to the news website, banks currently impose interest rates of 10-13 percent per year on loans taken out in dong, nearly 50 percent higher than loans issued in dollars.
Last February, the central bank announced that beginning in May it would only allow companies to only borrow in dollars if they were solvent enough to also pay back the loans in dollars.
The move is aimed to set a limit on dollar lending to stabilize the exchange rate between it and the dong.
But later the state bank agreed to let seafood companies continue to borrow dollars on a limitless basis through the end of 2012.
Seafood producers and exporters are continuing to struggle, Hai said. VASEP statistics from the first nine months of the year showed that there existed only 600 exporters across the country, down 30 percent from last year.
The number of seafood exporters is forecast to decline further due to the escalating cost of production, he added.
The industry will face more difficulties in 2013 unless companies are able to borrow from banks in dollars, VASEP said.
In the first ten months, seafood exports reached US$1.45 billion, a 3.4 percent increase year-on-year compared to a nearly 30 percent growth rate two years ago, VASEP data showed.
Exports to Vietnam's major markets are forecast to go down in 2013, such as EU with a decrease of 12-15 percent, and Japan with a 2 percent.
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