Farmers, seafood processors seek loans

Representatives of the Viet Nam Association of Seafood Exporters and Processors (VASEP) put forward several proposals at a meeting with committee officials held in Can Tho City, seeking ways to help the fisheries sector recover and meet its export potential.

VASEP general secretary Truong Dinh Hoe said at the meeting that in the first nine months of the year, over 600 enterprises involved in seafood exports recorded a combined export value of more than US$4.5 billion, a modest increase of 4.3 per cent over the corresponding period last year.

The export growth was not as much as expected, Hoe said, adding, "the main reason is that both farmers and processors are facing many difficulties, including a serious shortage of capital, raw materials and markets."

Of these, capital shortage is the biggest problem since it seriously affects the entire fishery industry's business and production activities, he said.

The Government and the central bank have helped with several measures including lower interest rates and restructuring of old debts, but very few farmers and enterprises have benefited from them, he added.

In the first six months of this year, 40,000ha of shrimp ponds, accounting for 6.49 per cent of the total area in the Cuu Long (Mekong) Delta, were hit by diseases, and farmers lost thousands of billions of dong, according to the Fisheries Department.

To continue farming after suffering such losses, farmers and small and medium enterprises really need soft loans from the banks.

However, most of them are unable to meet the strict requirements imposed by banks, including not having any bad debt, having feasible business projects, and assets used as collateral.

Complicated lending procedures are also a part of the problem.

For instance, farmers are asked to show sales and purchase invoices before a loan agreement can be signed, while Vietnamese farmers typically engage in "hand-to-hand selling and buying."

At present, the lending interest rates for borrowers in the fisheries industry have been cut to under 11 per cent per year, but this is still expensive for farmers, given their financial capacity. The rates are also higher than in many countries in the region, making Vietnamese seafood less competitive.

Hoe suggested that the South West Steering Committee petitions the State Bank of Viet Nam (SBV) to create conditions for farmers and enterprises involved in producing and processing seafood for export to get easier access to short-term loans in foreign currencies that carry low interest rates.

Nguyen Phong Quang, deputy head of the committee, agreed with Hoe's suggestion, saying it was a rational move considering the difficult situation that the industry is facing.

"The committee will make a proposal to the SBV asking it to delay application of the new circular that aims to tighten lending in foreign currencies by credit institutions until the end of 2013 so that seafood processors can access this cheap capital channel," said Quang.

The central bank on March 8 had issued a circular under which foreign currency loans for importing goods and services would be given only if borrowers demonstrate they have sufficient foreign currency to repay the loans.

"Foreign currency loans now have an interest rate of only 4 per cent per year, much lower than the dong loans' 11 per cent," he said.