Banks stop disbursement for seafood companies
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VietNamNet Bridge – After Bianfishco reportedly defaulted on its bank debt payments, commercial banks have unanimously ceased the disbursement for seafood companies, putting a lot of companies at the point of the death.
Bianfishco’s huge debts put bankers on tenterhooks
In Ca Mau province, by mid March 2012, a lot of seafood companies had shut down or just kept production at a moderate level. Enterprises have attributed the production stagnation to the lack of materials. However, in fact, the main reason behind this is the lack of capital. Commercial banks have tightened the lending to seafood companies after Bianfishco missed the due debt payments. Some companies even do not have money to pay their workers.
Capital depleted, materials short
A lot of seafood companies in Ca Mau province have been maintaining their production at a moderate level. These include Ngoc Sinh Seafood Trade and Processing Company in U Minh district, Dai Duong Food Copmany, Viet Hai Processing and Import-Export Company, Minh Chau Seafood Processing Company, Dai Duong Xanh Toan Cau Seafood Processing Company in the Hoa Trung industrial zone in Cai Nuoc district.
Two thirds of the workers at Viet Hai and Minh Chau have to take other jobs temporarily. The payroll of Dai Duong Company shows that the workers’ income has decreased dramatically. In January 2012, a worker of IQF division earned 1.2-1.3 million dong only.
Recently, hundreds of workers of Quoc Viet Company in Ca Mau City went on a strike, because their pay was just equal to 50 percent of the previous month.
Chau Thanh Ton, Chair of the Ca Mau provincial Labor Federation, said that since the beginning of 2012, he has continuously sent officers to seafood companies to help settle labor disputes. The representatives of the companies said that the production goes downhill because they have run out of working capital and have no materials to process.
40,000 seafood workers in distress
Nguyen Huu Thanh, Deputy General Director of Dai Duong Food Company, has admitted that the enterprises is facing big financial difficulties, because it has to pay overly high interest rates for bank loans, while it is very difficult to collect materials from farmers.
Thanh also said that commercial banks have become very cautious while establishing credit relations with seafood companies in the post-Bianfishco period.
According to the Ca Mau provincial Association of Seafood Exporters and Producers (CASEP), there are 34 shrimp processing factories in the province, of which only 40 percent of factories have been profitable, while 30 percent on the verge of bankruptcy, while others are meeting big difficulties. About 40,000 workers of the factories have been in distress.
In Bac Lieu province, in early March, a banker distrained upon the Minh Hieu Company in Gia Rai town, which then caused a fight between the two parties and was only settled by the intervention of the police.
The banker, ACB Ca Mau branch, provided a loan worth 20 billion dong to Minh Hieu Company with the condition that there always must be the volume of goods worth 30 billion dong in the company’s stocks.
However, after the Bianfishco case, the bank has become more cautious and discovered that only 7-8 tons of shrimp in stocks
Le Thi Hat, Director of Minh Hieu, said that the bank loan interest rates are overly high, while the foreign importers, who apply strict standards, have refused some consignments of exports with high antibiotic residues. As a result, the company has bogged down in debts. The company has stopped operation, while its 500 workers have left for other enterprises.
A source said that a seafood processing company in Soc Trang province still owes 2 trillion dong to creditors. Meanwhile, the head of the company is now in the US.