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Importers benefit from US credit programmes
Two Export Credit Guarantee Programmes run by the US are expected to help Vietnamese importers gain access to capital at preferential interest rates.
The GSM-102 and GSM-103 programmes guarantee payments from approved foreign banks to financial institutions in the US that extend credit to help finance imports of US agricultural commodities.
Nguyen Thi Thu Ha, Head of the Bank for Investment and Development of Viet Nam (BIDV) 's International Payment Department, said the BIDV was one of seven banks in Viet Nam approved by the Commodity Credit Corporation (CCC) under the US Department of Agriculture.
The other banks are Vietcombank, MB Bank, Sacombank, Agribank, VietinBank and Techcombank.
The banks will issue an irrevocable letter of credit in US dollars for domestic companies to import agricultural and food products from the US.
The US-based banks, in turn, will provide credit, guaranteed by the CCC for Vietnamese banks to make a Letter of Credit payment.
The financial institutions in the US and the approved banks open the letters of credit and negotiate their own terms.
Usually, the interest rate is linked to the US prime rate or the London Interbank Offered Rate (LIBOR) on a floating (Periodically adjusted) basis.
Interest rates on any credit extended to the importer by the local bank are a matter for the importer's negotiation with that bank.
The GSM-102 Export Credit Guarantee Programme provides coverage for credit periods not to exceed three years. In Viet Nam, it covers the credit terms for one year.
The GSM-103 Intermediate Export Credit Guarantee Programme covers periods of more than three years, but not more than 10 years.
Agricultural commodities must be food, feed, fibre or products.
Forestry products, such as lumber and pulp, and also fish, which the US Congress has defined as an agricultural commodity for the purposes of these programmes, can also be covered.
Coverage has encompassed such diverse products as cotton, vegetable oil, breeding chicks and telephone poles.
The GSM-103 programme is focused on a more limited number of products, such as wheat and breeder livestock.
Bilateral trade
At the meeting, Tu Minh Thien, director of Investment and Trade Promotion Centre, said this year the ITPC would focus on implementing trade promotional programmes between the two countries.
In the near future, the ITPC would sign an MoU with Vernon city in Los Angeles County in the US on trade, investment, and tourism co-operation.
According to Thien, Vernon City has 1,825 industrial facilities and factories that will offer more business opportunities for Vietnamese businesses.
Currently, the US is shifting some of its imports from China to other foreign markets, including Viet Nam.
More trade missions between Viet Nam and the US would be organised this year, he added.
Christopher Tran Phong, Director of Tymes Viet Nam Company, said the US was concerned about the proper certificates or legal procedures regarding the import of products.
Quality is always a top concern. Products made with clean and green technology as well as recycled products attract US consumers.
Last year, the two countries' bilateral trade reached more than US$18.2 billion, with the US becoming Viet Nam's biggest export market.
Viet Nam's exports to the US reached $14.7 billion, an increase of 20 per cent compared to 2009. Viet Nam ranked 27th out of 221 foreign exporters to the US.
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