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Export turnover high, profit low
The Ministry of Industry and Trade has announced with great pleasure--the impressive export growth rate in the first nine months of the year. However, exporters themselves do not feel so happy because the actual profit is really modest.
In 2010, the export revenue in the first nine months of the Da Nang-based Thuan Phuoc Seafood and Trade Company did not increase in comparison with the same period of the previous year. However, the profit was still high enough for the company to pay the dividend of 20 percent to shareholders. Meanwhile, in 2011, though the revenue is high, the actual profit is modest; the company still cannot make decision about the dividends.
“Breaking even” means “success”
Thuan Phuoc’s export revenue in the first nine months of the year reached 51 million dollars, an increase of 30 percent over the same period of the last year, which is considered an encouraging result in the context of the current difficulties. However, Thuan Phuoc’s General Director Tran Van Linh said the profit is insignificant.
Thuan Phuoc is just one of the seafood, rice, cashew nut, coffee, rubber, wooden furniture or garment exporters whose revenue goes up, but profit goes down. Especially, some enterprises still reportedly incurred loss despite the revenue increases.
At the conference reviewing the import-export performance in the first nine months of the year held by the Ministry of Industry and Trade several days ago, participants heard that what small and medium enterprises are striving now to reducing losses, not making profit.
Seafood export revenue in the first nine months of the year increased by 27 percent in comparison with the same period of the previous year, reaching 4.41 billion dollars. However, a lot of seafood companies reportedly faced big difficulties which forced them to give up orders.
“I know a lot of tra fish exporters are facing loss and they have to give up orders even when the market conditions are good,” said Duong Ngoc Minh, Deputy Chair of the Vietnam Association of Seafood Exporters and Producers VASEP.
Pham Van Bay, Deputy Chair of the Vietnam Food Association (VFA), also said that though the rice export turnover in the first nine months of the year increased by 23.71 percent, reaching 2.816 billion dollars, only a few enterprises could make profit, while the others just broke even or took loss.
Exporters said that the export prices have increased, but the increases are not big enough to cover the input cost increases.
Dang Hoang Giang, Secretary General of the Vietnam Cashew Association, said that the average export price was 8200 dollars per ton, or 1.5 times higher than that of the same period of the last year, but the material price has increased by 1.8-2 times, while the bank loan interest rates have increased to 22-24 percent.
Meanwhile, Nguyen Cong Hoang, Deputy General Director of Vinacafe, said that the optimum profit of farm produce trade is 15 percent only, while businesses have to pay 23-24 percent for bank loan interest rates, which means that the input costs have eaten up the profit.
Banks urged to ease interest rates
Most businesses have urged commercial banks to lower the interest rates to 17-19 percent, saying that the current overly high interest rates are unaffordable to exporters. Though banks have promised to slash the lending interest rates, only a few customers can borrow money at the preferential interest rates.
Giang said that lacking capital is the biggest problem for cashew nut exporters. A lot of enterprises had to bargain products away in September 2011 in order to get money to pay bank debts. As a result, the cashew price dropped dramatically from over 10,000 dong per kilo to 8000 dong.
According to Nguyen Cong Hoang, enterprises now need 50-60 million dong to collect coffee materials, but they cannot arrange capital. Enterprises find it very difficult to borrow money from banks, and if they can access bank loans, they have to pay overly high interest rates.
vietnamnet, SGTT
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