illustration photo |
Nguyen Duc Thanh, director of Tan An Foods Processing Export Company Ltd., one of Vietnam’s biggest cashew exporters, was upbeat about the 9.3 per cent devaluation of the dong to dollar.
“Each dollar earned from cashew exports will bring an additional VND600 to the company’s revenue [thanks to the new exchange rate], meaning that a $1 million export contract will generate VND600 million ($30,000) more for us,” he said.
Dinh Van Tien, head of Vietnam National Rubber Group’s Import and Export Division said the move “will benefit all exporters”.
However, Tu Liem Production and Service Company vice general director Nguyen Van Hai said the extra earnings was not so significant.
“Input costs have already soared,” Hai said.
Meanwhile, the dark cloud has begun to shadow importers.
“We have begun to feel losses as we have to use more dong to buy enough dollars to import materials and transfer to Nippon’s overseas parent company,” said Thai Ba Son, director of Nippon Paint Vietnam’s Hanoi-based office.
Vietnamese steel makers are importing 40 per cent of steel billets and scraps for domestic production.
According to the Ministry of Industry and Trade (MoIT), local firms imported 247,000 tonnes of billets and scrap worth $117 million in 2011’s first two months, up 52.4 and 75.6 per cent, respectively, against last year’s corresponding period.
“The firms’ import costs are predicted to be higher in the coming time due to high dollar prices and the surge in power prices locally,” said Vietnam Steel Association chairman Pham Chi Cuong.
A Vinausteel representative said billet prices had already risen to $670-$680 per tonne, up $60-$70 per tonne or 4-5 per cent against last month.
“The foreign exchange rate revision coupled with commercial bank’s lending rate of 17-18 per cent per year have squeezed local steel makers, while the steel consumption is low now,” he said.
Ho Quoc Hue, marketing director of CMC Distribution Company Limited - a leading information and communication in Vietnam, said he had also been punched by the devaluation.
He said that CMC would have to revise up 3-5 per cent of prices of its products due to the changed foreign exchange rate.
“We have no choice,” Hue said.
However, Vinaxuki’s chairman Bui Ngoc Huyen said the new exchange rate affected not only importers, but also garment and textile, leather and footwear exporters since imported materials comprised a large part in their products.
In 2010, Vietnam imported materials worth $84 billion, of which 10 per cent for consumption commodities, 20 per cent for equipment and machines and the remaining for petrol, steel, cotton and fibre.
“Vietnam’s economy heavily relies on imports. The State Bank’s move will result in price hikes of essential products. Consequently, prices will rise and consumers will be affected,” Huyen said.
What the stars mean:
★ Poor ★ ★ Promising ★★★ Good ★★★★ Very good ★★★★★ Exceptional