May 2, 2006

Vietnam's banks now shy away from shrimp farming loans

Commercial banks in Vietnam are now looking askance at loans for shrimp farming as it is now deemed a high-risk investment, experts said.

Until last year, experts said, shrimp farmers in central and Mekong Delta provinces have been the darling of the banking sector as banks eagerly sought entrepreneurs willing to take up shrimp farming. 

After a series of disasters in which diseases decimated shrimp stocks in hundreds of farms in Vietnam, bankers are now deeming the activity as unprofitable and have cut lending activities to the sector.

Development at projects which commercial banks have invested in was also slow, resulting in a general reluctance for banks to bankroll future projects, thus reducing its overall attractiveness.

To ensure revenue, experts said, more banks are putting their money into the international deposit market and the domestic inter-banking market where there are stable profits at reduced risk, they said.