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Food processors face capital shortage
The food and beverage industry has great potential for development, yet local producers have met many difficulties, especially a shortage of capital.
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| Workers of Thach Bich bottling plant package beverage cans. Although the food and beverage processing sector has potential to develop, it has to cope with a shortage of capital. |
Food consumption in Viet Nam will increase by 67 per cent from 2009 to 2014, according to a Business Monitor International (BMI) report.
Accordingly, there remains considerable scope in the country's food and drink demand, given the positive dynamics of low unemployment, strong tourism growth and increasing remittance inflows.
"In the longer term, domestic demand looks bright. A massive youthful population, sector immaturity and a plethora of macroeconomic driving factors make the Vietnamese consumer goods sector a high-growth prospect," the report stated.
The food industry currently has an annual average growth rate of over 11 per cent, according to the HCM City Food and Foodstuff Association.
Nguyen Van Phong, chief accountant of the HCM City-based Viet Hung Food Industry, said the food and beverage sector looked promising, but enterprises still met many impediments caused by high inflation and interest rates.
Companies had to compete more seriously, both locally and on an international level, as a certain number of consumers still preferred imported food of which the quality, food safety and hygiene standards were much higher, said industrial analysts.
"In order to rein in sales prices, firms have to cut costs to compensate for higher input spending on raw materials, higher interest rates and the necessity of business improvement," Phong said.
The average interest rate at 18-20 per cent per year in 2011 was a great bottleneck for most producers.
"We hoped that the rate would continue decreasing to 15 per cent as part of efforts to ease price hike pressures," he said.
Under Government and State Bank guidelines, commercial loans will prioritise financial resources for small – and medium-sized enterprises, farm production, exports and support industries, of which the food and drink sector forms an integral part.
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