|
Exchange rate distresses import businesses
Even though they expected the dong/dollar exchange rate adjustment, businesses are shocked at the sharp dollar increase of 9.3 percent.
Importers worry themselves sick
Deputy General Director of the Thai Nguyen Cast Iron and Steel Corporation Hoang Van Tong, ,complained to VietNamNet’s Vietnam Economic Forum that the exchange rate adjustment would surely make production costs increase sharply.
Despite the advantage of owning the biggest iron ore mine in the north which allows it to make steel ingots itself, the corporation still has to import 40 percent of the needed steel ingots and 90 percent of scrap steel. Meanwhile, the prices of both have increased dramatically in the world market, by 70-80 dollar per ton. Steel ingots are trading at $660-680 per ton.
The situation will be worsened by the exchange rate adjustments. On average, Thai Nguyen has to import 25,000 tons of steel ingots, worth $16.5 million, 20,000 tons of scrap steel worth $10.8 million. As for coke coal, the corporation has imported 30,000 tons worth $12 million and it will have to import two more consignments in the year. As such, the corporation will have to pay $39.5 million for the three kinds of materials. As the dollar price has increased, the corporation will have to pay an additional 54.905 billion dong, or 0.06 percent of its total revenue.
“Meanwhile, we have to deal with the increases in the price of oil, electricity and transport (The electricity increase has been slated for March 1, 2011),” he said.
He went on to say that though Thai Nguyen has raised the retail prices, with the input material price increases, Thai Nguyen’s products are selling at the prices below the production costs.
Exporters delighted
While importers worry about the dollar price increases, exporters are delighted because their products will become cheaper and more competitive in the world market.
The report released by the Ministry of Industry and Trade shows that many export items benefit from the price increases. These include tea, the price of which has increased by 10 percent, rice (+ 2.8 percent), cassava (43.4 percent) rubber (69.1 percent). That explains why while the export volume decreased in January, the export value still increased.
Garment companies have got enough orders which can provide jobs until the end of March. In January 2011, the export revenue reached the record high of $900 million, an increase of 10.6 percent in comparison with the same period in 2010. Thanks to the exchange rate adjustment, the garment industry has earned 1251 billion dong more.
Dang Phuong Dung, Deputy General Director of the Vietnam Textile and Garment Corporation Vinatex, believes that the exchange rate adjustments will not harm garment companies, especially the ones which have high exports. If garment companies have to pay more for import materials, they will raise the export prices.
Tra exporters are said to greatly benefit from the exchange rate adjustments. However, Nguyen Huy Vien, General Director of the Ha Long Seafood Corporation, said that the profit would not be big. “The sale price of one kilogram of tra fish sold domestically is even higher than the export price to Hungary,” he said.
Statistics show that Vietnamese enterprises exported $400 million worth of seafood products in January. As such, with the exchange rate adjustment, the enterprises have automatically gained 556 billion dong more.
Also thanks to the exchange rate adjustments, tea exporters also got 20.85 billion dong from exports in January, while cassava exporters got 133.44 billion dong more.
Pham Huyen
vietnamnet
|
