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Dong devalution hurts equipment importers
Many manufacturing enterprises in Viet Nam have faced losses recently because of the devaluation of the Vietnamese dong against the US dollar.
The chairman of Sai Gon Paper Corporation, Cao Tien Vi, said his company had to pay an additional VND25 billion for US$100 million in equipment it had imported for its expansion plan.
"We have had to accept lower profits for the last three months of the year because we could not raise the prices of our products that were included in contracts signed with customers earlier this year," said Vi.
The owner of a plastic company in HCM City, who declined to be named, said in early September that he had signed a contract to import materials worth $5 million at the exchange rate of VND19,500 per US dollar.
Now he has to pay over VND20,000 for each US dollar received from the bank to pay for imported materials.
"We're sure that we'll incur losses for the products we make with these input materials that were bought at a higher exchange rate," he said.
The chairman and CEO of the Sai Gon Trade&Production Development Corp (Sadaco), Tran Quoc Manh, said the devaluation of the Vietnamese dong had caused higher prices of imported materials, transport charges and workers wages. As a result, total production costs have climbed.
Imported materials account for 30 per cent to 50 per cent of the total production cost, so profits from the increasing forex rate cannot offset the increase in input factors.
Exporters need dollars to pay for imports, so they sell dollars to banks at the formally quoted price. But they have complained that they must pay additional fees to buy dollars at quoted prices from banks.
Nguyen Thi Cuc, Deputy General Director of Phu Nhuan Jewelry Company (PJC), said her company earned $300 million from exports in September and sold the dollars to banks, but now she could not find dollars at the quoted price at banks to import materials.
"Banks say they can't find dollars at the quoted price for PNJ," said Cuc.
Do Duy Thai, chairman of the Viet Nam Steel Company, said the rising price of the US dollar had caused difficulties to VITAS members, as most of the materials for their production are imported.
Thai said they must pay for imported materials in US dollars and sell their products in Vietnamese dong. "To solve this problem, we can do nothing but raise prices on our products."
Animal feed prices rise
Local farmers, who are facing difficulties because of the rising price of animal feed, have not been able to find a solution to the problem, as the animal-feed processing industry has had to rely more and more on imported materials.
Phung Thi Hai, owner of a pig farm in the northern province of Bac Ninh, has been worried about the animal-feed price hikes in the past few months as her farm consumes from 18 to 20 tonnes of animal feed each month.
In September, concentrated feed prices went up by VND200 per kilogramme and mixed feed by VND100 per kilogramme, in addition to another VND80 per kg in early October.
"But it's not easy at all to raise the price for pork. So I would be very happy if I can break even for the year," Hai added.
Feed manufacturers say they have had no option but to raise prices.
Nguyen Xuan Huyen, director of Viet Tin JSC, said the price of materials rose sharply on the world market in the past two months, adding that maize went up from VND4,900/kg to VND6,200/kg while cassava rose from VND4,600/kg to VND5,600/kg.
Hai increased the prices of his products twice during the past two months, from VND7,500 to VND7,800 per kilogramme.
Huyen said higher production caused greater losses.
His animal feed processing line had been operating at 70 per cent of the designed capacity, just "to maintain the staff and the factory's operation," he added.
Exchange-rate fluctuations and material price hikes are the major reasons behind the increases in animal feed prices.
According to the Ministry of Agriculture and Rural Development's Animal Husbandry Department, 30 per cent of the materials for the local feed processing industry are imported.
He added that imported meat had slashed farmers' profits and, at the same time, discouraged the development of support industries for the country's animal husbandry sector.
Fighting to stabilise prices
The local market has encounter price fluctuations in the last quarter of the year, making it more difficult for authorities to stabilise prices of goods and services.
According to the Ministry of Industry and Trade, to keep the CPI index at 8 per cent in 2010 as required by the Government, the country must create a retail network and control prices of essential goods.
By the end of October, a sufficient supply of 12 essential goods, including food, steel, sugar, fertilisers, animal feed, fuels, paper, coal, medicine, cement and salt, had been attained to meet demand in the local market.
The Deputy Minister of MIT, Ho Thi Kim Thoa, said agencies under MIT and provincial authorities were asked to enhance the market forecasts in order to take proper measures for market stabilisation.
The provincial Industry and Trade departments were asked to coordinate with the departments of Finance, Health, Construction, and Agriculture and Rural Development to make plans to mobilise capital from each locality to implement price-stabilisation measures.
Strong companies and suppliers which have a big market share were expected to be chosen to take part in the price-stabilisation programmes.
Each locality, however, must rely on its particular situation and condition to identify goods that need price stabilisation.
Le Hung Vong
vietnamnews
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