HANOI: The Việt Nam Association of Seafood Exporters and Producers (VASEP) has requested the State Bank of Việt Nam to revise existing regulations to let them access short-term foreign currency loans. According to a central bank’s circular on credit institutions and foreign bank branches providing foreign currency loans to residents, short-term loans to fund the export of goods were prohibited, starting in the second quarter, in an effort to stem dollarisation.
Tightened access to foreign currencies, which forces local producers to borrow in Vietnamese đồng with higher interest rates, was undermining their competitiveness, the association said, adding that the gap in competitive advantages between local and foreign-invested enterprises, which had significant capital in foreign currency, could widen.
VASEP said if Vietnamese firms must borrow in Vietnamese đồng for short-term capital, the differences in interest rates on Vietnamese đồng and foreign currencies would push up the prices of Vietnamese exported goods in general and seafood products in particular.
In addition, many seafood companies, especially small and medium-sized enterprises, are struggling to arrange capital for 2016 after a year of declining export revenue. The association said seafood export turnover in 2015 saw the first ever drop by more than US$1 billion against 2014, earning $6.7 billion. The devaluation of several currencies has also pushed Vietnamese exports into difficult situations.
With a stable forex trend witnessed in the first quarter of this year, the association said that allowing short-term loans in foreign currency in 2016 would not see a negative impact from significant fluctuations in forex.
Previously, Bùi Quốc Dũng, director of the central bank’s Monetary Policy Department, said lending in foreign currencies had been eased to support exporters during the economic downturn. Now that the economy had improved, lending in foreign currencies must be tightened to stabilise the forex market and promote credit growth in Vietnamese đồng.
