December 22, 2011

An alarming situation is currently being faced by Vietnam's seafood export to most markets, especially Europe.

Businesses can barely sell their products and face the daunting task of collecting debts; and at the same time need to carefully re-select their clients with binding contracts to avoid losses.

After exporting seafood to Europe to cater for Christmas and New Year's, as per usual, enterprises would prepare for the first two quarters of the following year since the beginning of December. However, this year, export to many European nations, all of which make up 40% of market, is almost completely stalled. Many tra fish businesses were forced to cut their prices from US$3.2-3.3 down to US$2.8-2.9 per kilogramme of fillet, but only few transactions were successful because clients pay even less.

Mr Nguyen Van Ky, CEO of Agrifish An Giang, shared that now, only companies with long-term contracts continue to deliver their products, while the rest continue production only to maintain employment to keep their workers. The financial crisis in Europe has affected the capital flow of many enterprises, caused banks to tighten credit. Many large enterprises had their loan limit reduced, small enterprises even had their loans cut. Currently, instead of selling their products, businesses have to review their debts, re-assess their clients and tighten the terms of their contracts. Before this, businesses usually allow up to 30-45 days of debt, some even wait for their clients to successfully sell their products to clear their debts. However, regulations now dictate that all transactions must be duly paid for immediately.

General Secretary of Vietnam Association of Seafood Exporters and Producers (VASEP), Mr Truong Dinh Hoe, reaffirmed that there is too much risk in selling to Europe in the current situation. As of now, VASEP has not received any feedbacks regarding any clients who are unable to pay, but there are many cases of delay in payments. "The current method of transaction requires immediate payment, and businesses need to be careful in choosing their clients", Hoe warned.