Tra fish industry faces capital crisis

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VietStock FI English - 33 month(s) ago 7 readings

Tra fish industry faces capital crisis

Tra fish producers and exporters are calling for loosened credit from commercial banks as they lack capital to maintain and expand their business and exports.

Workers at the Southern Fishery Industries Co process tra fish. The country's tra fish exports during the first quarter reached 161,000 tonnes, with a total revenue of US$421 million, an increase of 12 per cent and 15 per cent, respectively, compared to the corresponding period last year.

Workers at the Southern Fishery Industries Co process tra fish. The country's tra fish exports during the first quarter reached 161,000 tonnes, with a total revenue of US$421 million, an increase of 12 per cent and 15 per cent, respectively, compared to the corresponding period last year.

The tra fish industry, which has never faced such a crisis, has seen the closure of many seafood-production companies, especially in the Mekong River Delta, according to the Viet Nam Association of Seafood Exporters and Producers (VASEP).

More than 90 per cent of businesses in the field are facing a serious capital shortage and have been running 50-70 per cent under capacity, VASEP vice president Nguyen Huu Dung told participants at a conference held in HCM City on Tuesday to review the first quarter's tra fish export activities.

"Around 50 per cent of enterprises that produce feed for tra fish have closed down because of lack of capital," said Duong Ngoc Minh, chairman of the VASEP Freshwater Fish Committee (VFFA).

The association said the tra fish industry would face a year of difficulties, including a reduction in its export capacity from the next quarter and thousands of workers facing layoffs.

Export tra fish volume for the first quarter reached 161,000 tonnes, with total revenue of US$421 million, an increase of 12 per cent and 15 per cent, respectively, compared to the corresponding period last year, according to a report released by the association at the meeting.

However, the increase was due to the amount of tra fish in stock from last year, according to VASEP.

The sector aims to gain an export revenue of $1.2 billion this year.

Since the beginning of the year, productivity has fallen as most companies in the field could not get access to bank loans to invest in input materials and production.

At least 150 businesses in Ca Mau, one of the provinces that lead in tra fish exports in the Mekong region, closed or switched business in the first three months of the year, according to the provincial Department of Planning and Investment. The number is 3.5 times that of the same period last year.

The remaining companies have been running under capacity due to lack of capital. The rapid increase of input material costs, and tightened credit were the main causes behind the capital shortage.

In An Giang Province, another leader in tra fish production, nearly 900 workers in seafood production companies have either quit their jobs or have been laid off this year, according to the provincial People's Committee.

According to the committee, a large number of seafood producers and exporters in the province have lacked materials, capital and contracts from overseas markets, especially in Europe.

Can Tho is facing a similar problem, with its year-on-year seafood productivity decreasing by 20-50 per cent.

More than 90 per cent of enterprises in Can Tho have asked for an increase in their loan limit, which is VND10 billion (US$476,000) minimum and VND1.4 trillion ($66.6 million) maximum, according to VASEP. As many as 92.3 per cent of companies are in urgent need of capital in the second quarter.

The decline of export markets because of the financial crisis in Europe and the recent bankruptcy of the Can Tho-based Binh An Seafood Company, known as Bianfishco, has caused banks to place the tra fish industry on a high-risk list and to tighten credit.

Ngo Quang Truong, the director of Can Tho-based Bien Dong Seafood Joint-Stock Company, said although the company was still running well with its first-quarter revenue reaching $9 million, Asia Commercial Bank (ACB) had still cut loans and limited credit.

The ACB's move has been made, according to Truong, following the bad debts of a small number of companies such as Binh An and An Khang.

Bien Dong is one of the 70 per cent of tra fish companies in Can Tho that have been investing in high-quality production and are facing bankruptcy because of tightened credit.

Minh, the VFFA chairman, said," the banks should not stay out of the situation when tra fish producers and exporters face such difficulties."

He called on the banks to work with enterprises and analyse their situation to help them deal with problems, as the banks would also be affected by the enterprises' losses.

"The banks play a very important role in helping enterprises deal with capital shortage, which is the key reason behind the sector's crisis," said Minh, adding that the enterprises would also need Government support.

The deputy head of VASEP, Nguyen Huu Dung, said the association would have a meeting with the Prime Minister to discuss measures to help enterprises gain access to loans in the next quarter.

He also asked the enterprises to speak frankly about their difficulties, and urged VASEP to co-ordinate with local banks to obtain low-interest rate loans from foreign funds.

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