VASEP calls for dollar loans

Restrictions on foreign currecy loans are sinking seafood exporters

The Vietnam Association of Seafood Exporters and Producers, VASEP, has sent an urgent call to the State Bank of Vietnam to list seafood exporters as being permitted to take out foreign currency loans. A central bank’s recent decision only allows credit institutions to gives loans to importers, investors abroad, and debtors of foreign loans.

The decision was made because of the dearth of foreign currencies in the banking system, and to prevent people making a profit from the difference between the lending interest rate of the Vietnamese dong and the US dollar.

Truong Dinh Hoe, VASEP general secretary, said that a large number of its members are sending requests to the association after May 1, the date when the central bank will discontinue loans to seafood exporters.
"Exporters in the Mekong Delta are the most vulnerable and may narrow their production due to less competitive advantages. The bar on foreign currency loans contributes to this," said Hoe.

The new bar will force exporters to pay a higher cost for interest rates due to a large gap between US dollar and Vietnamese dong loans. The lending interest rate of the US dollar is equal to only a third of the dong.
"The decision is now a challenge to exporters to sit idly by and do nothing. Seafood exporters had already accessed limited foreign currency loans before the new decision of the central bank was issued," said Do Van Vinh, ATP seafood general director.

Local shrimp exporters are facing fierce competition with rivals in Bangladesh, India and Indonesia, which offer $0.6- $1 per kg lower for prawn than Vietnamese exporters. The new trend in shrimp raising and consumption of white shrimp also puts local exporters in a disadvantageous situation. "The loans in Vietnamese dong will add to the difficulties of exporters," said Tuan Anh, deputy general director of Ut Xi seafood processing company.