Foreign-invested businesses profit from exports of farm produce

Farm produce is considered one of the spearheads of socio-economic development in 2011. It is expected not only to increase farmers’ incomes, but also balance Vietnam’s export and import.

However, most of export earnings more often than not fall into the hands of foreign-invested businesses as they get the upper hand over domestic ones in terms of capital spending.

Domestic businesses at a disadvantage

At the March meeting on the export and import activities held by the Ministry of Industry and Trade, Do Hoai Nam, Chairman of the Vietnam Pepper Association (VPA) and Vice Chairman of the Association of Coffee and Cocoa of Vietnam said although coffee exports earned huge profits in 2010 and early 2011, most of the money found its way into the pockets of foreign-invested businesses which took advantage of buying a huge volume of coffee when prices started plumping.

In the meantime, Vietnamese businesses could do nothing but sat idle, Nam said.

Unlike what happened in Vietnam, foreign exporters could hold no sway over the market in Brazil as the country has a policy of supporting domestic businesses by granting export quotas every three months.

Nguyen Thai Hoc, Chairman of the Vietnam Cashew Association (Vinacas), said it is high time in the second quarter to buy materials from African countries for processing.

However, he said, it is not easy for them to access bank loans.

Hoc cited a case in 2010: Indian companies had bought all stocks of cashew before cash-trapped Vietnamese businesses could make any deal. So they had to accept a buy-back at throat-cut prices.

Nam said that foreign-invested (FDI) companies are ready to make a killing out of such buy-backs.

Hoc proposed that banks reduce the mortgage rate to 10-15 percent to help businesses access bank loans more easily.

Cash shortage – a burning issue

MOIT Deputy Minister Nguyen Thanh Bien attributed the cause of cash shortages to poor coordination between domestic businesses and banks.

Nam said it is not too difficult to solve the problem as the Government has already fixed a limit on the amount of loans banks can help businesses with each farm product.

He said low interest rates are not the only instrument domestic businesses are looking for. They all need to get loans when necessary.

According to Nam, banks should give priority to those businesses who are operating well.

Tran Phu Minh, General Director of the Vietnam Development Bank, said that banks are required to ensure the safety of credit.

Sharing Minh’s view, Tran Hong Hanh, Deputy Director General of the Credit Department under the State Bank of Vietnam, added that loans will be available if businesses can prove effective in operation. – VOV

Tags: Vietnam farm exports