Foreign currency loan restrictions hit wood importers

Foreign currency loan restrictions hit wood importers

By Thai Hang - The Saigon Times Daily

Wood processing at a local workshop. Enterprises are lacking foreign currency to import wood material because of the central bank’s restrictions on foreign currency lending at commercial banks - Photo: Thai Hang

HCMC – The central bank’s restrictions on foreign currency loans are making life hard for local wood material importers, according to the Vietnam Timber and Forest Product Association (Vietfores).

Vietfores vice chairman Nguyen Ton Quyen said the association was seeking approval from the central bank and relevant agencies to remove the restrictions on foreign currency lending to wood material importers.

Vietnamese wood processors each year import about four million cubic meters of wood, show Vietfores figures.

Commercial banks provide local wood processors with loans in U.S. dollar with an annual interest rate of 6-7%. However, enterprises have had difficulty accessing those loans since the central bank’s Directive 01/CT-NHNN came out on February 13 this year.

Tran Thien, director of Thanh Hoa Co. Ltd., said his company won bids to import forest wood from South America and Africa but later gave up the import due to lack of foreign funds.

“Our capital costs have risen 5-7%, making it difficult to compete with foreign wood importers currently active in Vietnam,” he said.

To assist local wood importers and suppliers, Vietfores has requested the central bank, and the Ministry of Agriculture and Rural Development to consider allowing enterprises to borrow loans in foreign currency for wood material import based on the balance of the industry’s foreign currency revenues.

According to the Ministry of Industry and Trade, the export turnover of Vietnam’s wood and furniture products reached US$966 million in the first quarter this year, up 18% versus the same period last year.