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Manufacturers glum despite solid January growth
Industrial growth may have spurted to 16 per cent in January but businesses have a litany of complaints about the difficulties they face.
On top of their list is the recent decision by the State Bank of Viet Nam to devalue the dong by 9.3 per cent which has hit them hard since they import raw materials for manufacturing.
Those relying greatly on imports, like the steel, fertiliser, plastic, garments and footwear sectors, are especially badly affected.
For Thai Nguyen Steel Company, for instance, the devaluation has added VND50 billion (US$2.39 million) to expenses.
Just a few day before the currency's depreciation, the prices of some raw materials had increased.
As a result of the double whammy, the price of steel ingots, the basic material in steel manufacture, has increased to $680 a tonne, and that of coke to $400.
Earlier this month, many steel makers increased prices from VND400,000 to VND1 million per tonne.
The company expects a further rise in prices because of the impending electricity tariff hike.
Seafood processors are affected by the depreciation because they import 60 to 70 per cent of the materials required to produce feed.
Besides, Nguyen Van Ky, General Director of An Giang Province-based Agrifish, said banks were now charging interest of 18 to 20 per cent on loans, making them unaffordable for most companies.
On top of all these is the imminent hike in the price of petroleum after crude oil prices rose relentlessly in the past month, according to analysts.
Economist Bui Kien Thanh said: "Private firms should focus on products for which raw materials can be sourced domestically and developing support industries to reduce dependence on imports."
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