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Shipping companies refuse VND fee payments
Shipping companies have announced they will not accept payments for shipping fees in VND, a move called by some a blatant violation of the law.
Mediterranean Shipping Company S.A (MSC) on June 5 asked Vietnamese companies to make payments for shipping fees and other surcharges in dollars at the black market exchange rate. It also informed them that it would stop accepting payments in VND immediately as the company had locked its VND account in order to avoid losses.
Locking VND account because of lacking dollars
Le Trieu Phuong, Deputy General Director of MSC, said that the move was just a temporary measure to help rescue the company, though it did not come in line with the current laws.
Explaining this, Phuong showed the loss of VND3bil for the company in May 2008 alone, just because of VND/US$ exchange rate fluctuations.
“If MSC continues accepting payments in VND, it will go bankrupt, as it has to pay foreign partners $4mil a month,” Phuong said.
According to Phuong, MSC is facing a heap of difficulties as commercial banks are refusing to sell it dollars. It needs $2mil to pay foreign shipping firms.
He said that either MSC had to purchase dollars on the black market or ask Vietnamese companies to pay in dollars instead of VND.
If MSC accepted payments in VND from 200 farm produce exporters, and then used the VND to buy dollars at high prices, it would have suffered the loss of VND2bil on every $1mil.
Breaking the law
Commenting about the announcement by MSC, Tran Huu Huynh, Head of the Legal Department under the Vietnam Chamber of Commerce and Industry (VCCI), said that the move by MSC was a serious violation of Vietnamese laws.
According to Huynh, in principle, only the VND is accepted in payment for transactions carried out in territory of Vietnam. If MSC unilaterally applied the exchange rate of VND18,000/US$1 as applied on the black market on June 7, it would violate the current Ordinance on Forex Management, and must be heavily punished. The exchange rate announced by the State Bank of Vietnam for June 7 was VND16,132/US$1.
The Vietnamese companies denied by MSC to undertake transactions in VND threatened to petition the Ministry of Transport and relevant ministries.
If MSC asks companies to make payment in US$, the exchange rates to be applied for the payments must be the exchange rates announced by the State Bank of Vietnam, not exchange rates unilaterally set by MSC. If one of the two parties does not follow the stipulated regulations, the contracts on shipping fee payment between MSC and import-export companies will become invalid.
On June 9, the Vietnam Cashew Association Vinacas sent a document to MSC and relevant ministries, protesting the decision by MSC to unilaterally change the provisions in making payments for shipping fees.
Other companies which are clients of MSC have also voiced protest against MSC’s decision, as it may cause the companies losses.
Chairman of the Vietnam Shipowners’ Association Duong Chi Dung on June 10 also said that in principle, the exchange rate to be applied in payment must be the VND/US$ exchange rate announced by the State Bank of Vietnam at the time of payment.
The story continues
After the strong protest from clients, on June 10, MSC resumed accepting payments in VND.
However, MSC is not the only shipping agency that has demanded payments in dollars. China Shipping Vietnam on June 10 sent a notice to clients, asking them to make payments in dollars instead of VND.
The notice said that if clients make payments in VND, the exchange rate for payment will be the exchange rate announced by Vietcombank plus the surcharge of 10%.
Jardine Shipping on June 10 also refused payment in VND.
Not only shipping agencies, but airlines have also been trying to impose their own terms on Vietnamese clients. TransViet Cargo, an agent representing a lot of international airlines in Vietnam, began applying the payment for way-bill in US$ on June 5. The company said that due to the dollar price fluctuations, it is now difficult to collect dollars to pay foreign airlines.
VNN
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