Dollar fears stalk firms

For example Nguyen Minh Sinh, chief operation officer of paint maker Moment Company, said the company had signed a loan agreement, but later the bank did not have enough foreign currency to lend the amount.

This is the common situation for many companies, especially for those in need of foreign currencies to pay debts with the year end approaching.

Experts said the pressure on dollar demands especially at the end of the year is hardly a surprise, particularly when Vietnam is still suffering from trade deficits.

For example, in the leather footwear industry, enterprises gain foreign currencies from exporting, but the majority of raw materials and machines were imported.

“In October, even when exports increased 25 per cent compared to last year, the production costs rose 30 per cent. Thus, the company has paltry profits,” said Truong Loi Trading-Production president Doan Sy Loi.

Another reason for the paucity of dollars was the gap in interest rates between different currencies. The interest for a dollar loan at 8 per cent, each year was much lower than that of dong at 18-19 per cent, each year.

“Firms are rushing to get a dollar loans,” Vietcombank vice president Nguyen Van Tuan said

Meanwhile, according to experts, supplies were tightened due to the economic downturn when export enterprises received fewer orders.

Lien Phat, a Binh Duong province export footwear company, is an example. Its president Truong Thi Thuy Lien said the European public debt crisis caused orders in the first quarter of 2012 to significantly reduce.

“Some 70 per cent of our orders come from Europe, the rest from America, South African and Australia. The negative impact from the European public debt crisis on the consumer demand caused the decline in future orders,” Loi of Truong Loi added.

In order to cope with the situation, companies choose to focus on its current the products, rather than spreading funds in diversifying them.

“We don’t want to aim for profits this year. The challenge is to maintain the stable production until the crisis passes,” Lien of Lien Phat said.