Phuong Nam gets sinking feeling

October 08, 2012 | 09:37
Seafood firms are struggling to keep their heads above water after Phuong Nam Foodstuff Corp, a privately held export seafood company, appears to be in deep trouble.

Phuong Nam raises shrimp and fish, processes and exports to the US, Japan, Europe, Canada, the Middle East and other countries.

It is ranked as the third biggest seafood and second biggest shrimp supplier in Vietnam.

The trouble comes on the heels of shattering news that Lam Ngoc Khuan, the chairman of the Phuong Nam Foodstuff Corp, has resigned and allowed seven banks located in Soc Trang to restructure the company.

Thus, many seafood firms are now in dire need of support from bodies involved to help them out. Otherwise, it is hard for the seafood enterprises to hit the target of exporting $6.5 billion by the end of 2012.
“After the move, many banks are finding ways to take capital from the seafood processing companies. Only strong enterprises with abundant capital sources will be able to survive,” said Nguyen Tuan Anh, general director of Ut Xi Seafood Processing Joint Stock Company.
He added enterprises such as packaging suppliers, sub-material companies and shipping firms all required the seafood companies to pay in cash as soon as transactions are done.
”Most seafood processing enterprises are devoid of working capital because customers only pay export bills after one to two months. Approaching new capital sources is also difficult because banks are cutting down on outstanding loans among seafood processing companies,” he said.

Seafood enterprises’ trouble comes from the lack of capital because many of them got bank loans for big investment plans in recent years, but failed in repayment and could not borrow more, according to Bui Nguyen Khanh, general director of Ca Mau Seafood.
Meanwhile, the seafood export market shows no sign of recovery after the third quarter. Statistics point out that August’s seafood exports to US, EU, Japan, South-Korea all plunged dramatically.  
Japan, one of the biggest shrimp export markets of Vietnam, began to examine Ethoxyquin residue in Vietnamese seafood since May, 2012. This was the main cause leading to Ut Xi’s declining export volume in 2012’s first nine months which shed 7 and 20 per cent, respectively, compared to 2011 and 2010 corresponding period.
“Although we expect $80 million export value in 2012, it could be 70 per cent at best if this situation continues till the year’s end,” he added.

It is reported that Japan also examined Ethoxyquin in seafood products from Thailand, Indonesia. However, these countries’ governments have talked to Japanese authorities to find a solution.

“It is high time for the government to send people to Japan to work on the issue,” Khanh suggested.

According to Ministry of Industry and Trade, Vietnam’s seafood export up to September this year was lower than in the previous years, with its export turnover fetching $4.4 billion.

By Thanh Vu

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