June 6, 2012

Vietnamese seafood exporters experience business hardships

Local media reported Tuesday (June 5) that Vietnamese seafood exporters are facing numerous difficulties for their business.

Vietnamese seafood exports earned US$2.3 billion from seafood exports in the first five months, an increase of 11.7% in value on-year. The increase is positive in terms of value, but seafood exporters are actually facing with numerous difficulties for their business, including the decrease in the number of seafood exports businesses, shortage of raw materials for processing and capital for operation, increase in the input cost of the products and in demand for the imports in service of production, local Vietnam Economic Times (VET) Review quoted sources from the Vietnam Association of Seafood Exporters and Producers (VASEP) as saying.

According to VASEP, in the first five months, there were only 473 companies involved in seafood exports, down from 800 companies in the same period last year. This resulted in the decrease of US$59.7 million in value in the first quarter. The fact that the country's total seafood exports value still rose by 11.7% was due to the increased turnover of big companies during the period against last year.

Demands for Vietnamese seafood exports in foreign markets declined, including those from the EU, the largest seafood importer among Vietnam's 129 seafood importers, which was down 7.9% on-year. Vietnamese shrimp and basa fish exports to the EU decreased 21.8% and 12.4%, respectively, reported VASEP.

In the first five months, Vietnam's seafood production output reached over one million tonnes, up 3%, and aquatic products output of over one million tonnes, up 5% on-year. However, Vietnamese seafood processors still lacked raw materials for their operation. Part of the reason is that the output of two main products, shrimps and tra fish, is not stable. The breeding areas also decreased. About 30% of seafood processors suspended operations due to the lack of raw materials.

Seafood exporters also face with shortage of capital. With banks' lending interest rate of 19-20%, they could not afford borrowing loans from the banks. Results of a survey showed that 90% of seafood businesses want to increase the amount of loans, from VND10 billion (US$479,600) at least to VND1.4 billion (US$67 million) at most for each business.

Meanwhile, demands for the imports of raw materials and spare parts in service of seafood export production sharply increased amidst cumbersome procedures. In the first quarter, Vietnam imported seafood products from 72 countries, worth over US$157 million, of which materials for production of the exports accounted for 80%.

Besides, seafood export companies had to pay various kinds of fees that made their products less competitive than their foreign rivals. For example, the export price of shrimps from India and Indonesia is currently 15-25% lower than those from Vietnam, reported VET Review.

To support seafood exporters in the coming months, VASEP sent a proposal to the Vietnamese Ministry of Agriculture and Rural Development (MARD) that would submit it to the prime minister for approval. The proposal comprises two stimulus packages of credits, including VND2 trillion (US$95.9 million) for raw materials purchasers and VND2.4 trillion (US$115 million) for tra fish breeders.

Vietnam set a target to earn US$6.5 billion from seafood exports this year, an increase from the 2011 figure of US$6.1 billion, according to MARD.