VietNam Business: imported materials

Showing posts with label imported materials. Show all posts

Sunday, October 17, 2010

Fish processors decry circular, say shutdown imminent

HCMC – Fish processors at a meeting in HCMC on Monday blasted the Ministry of Agriculture and Rural Development over a circular that imposes tough control on imported materials, saying many plants would face shutdown if the circular is not withdrawn.

Circular 25/2010/TT-BNNPTNT, which took effect last Wednesday, requires that food materials imported into Vietnam must be registered with quality control agencies in the countries of origin. These agencies then are required to send such registrations to the National Agro-Forestry-Fisheries Quality Assurance Department (Nafiqad) under Vietnam’s agriculture ministry.

At the meeting on Monday, local processors and the Vietnam Association of Seafood Exporters and Producers (VASEP) called on the Government and the ministry not to apply the circular, otherwise many plants will be closed down due to the lack of materials. They petitioned that the circular not apply to such imported materials as cod, salmon and tuna.

Tran Thanh Chien, vice chair of VASEP, told the meeting that as of Monday, only ten out of 80 countries and territories that exported fishery materials to Vietnam had agreed to observe the circular, as registered with Nafiqad. That means many contracted shipments cannot be delivered to Vietnam due to the new rule, Chien said.

The circular has been forwarded to Vietnam’s trading partners via their embassies, but many countries have not had their representatives in Vietnam, said Chien. Meanwhile, several economies like Thailand, Myanmar, and Taiwan have answered that they do not observe Vietnam’s circular because they have not asked for the same from Vietnam.

The agriculture ministry has explained that many countries worldwide have imposed regulations on Vietnam’s food products, so Vietnam is now doing the same to raise the stance of the country. But Chien of VASEP rejected the reasoning, saying the regulations may apply well with other food materials like cattle and poultry meat, but not fisheries.

The meeting on Monday heard numerous outcries.

Nguyen Xuan Nam, director of Hai Vuong Company in Khanh Hoa Province, said his company began to import fishery materials since 1999 for processing and export to other countries.

“To ensure jobs for 2,000 workers all year round, we have to import 70% of our demand for fish materials. If Circular 25 still prevails, we will have to close down our factories early next month as materials will run out by then,” Nam said.

Nguyen Pham Thanh, general director of Highland Dragon in Binh Duong Province, said his company needed 5,000 to 6,000 tons of tuna a month to produce canned food. “Now materials are enough for our processing until mid-September, and we will have to scale down production or shut down one or two factories,” he said.

Meanwhile, Cao Thi Kim Loan, director of Binh Dinh Fishery Joint-stock Company, expressed concern that her company would have to pay compensation for partners when having not enough finished products for delivery.

In his petition sent to the Prime Minister, Nguyen Quang Tuyen, director of Cafico Vietnam, said the circular will only trim the material supply sources and thus eliminate competition, which will hit Vietnamese processors. That in the end will cut into the competitiveness of Vietnamese enterprises against rivals from China, the Philippines and Thailand.

Sunday, September 19, 2010

Weaker dong enhances inflation threat: experts

Weaker dong enhances inflation threat: experts Relatively low incremental increases in prices over the last few months have lulled consumers and others into a sense of false security, experts say, warning that inflation continues to be a serious threat in the coming months.

The recent devaluation of the dong against the dollar only enhances the threat, they add.

Production enterprises dependent on imported materials have to bear higher input costs and are likely to increase prices.

The State Bank of Vietnam on August 18 set the daily reference rate of the dong two percent lower at 18,932 to a dollar, the third devaluation since last November, in a move aimed at reducing the trade deficit.

The dong was little changed at 19,485 per dollar as of 9:10 a.m. Thursday in Hanoi, compared with 19,490 a week ago, according to data compiled by Bloomberg.

Dao Duy Kha, deputy general director of the Vietnam Plastics Corporation, said up to 90 percent of materials for the country’s plastic production was imported, thus the lower value of the dong was a big blow.

The gasoline price hike early this month had already pushed up their production costs and the higher dollar prices now make an increase in selling prices “unavoidable,” he said.

Some association members have already increased their prices, while others will do so soon, with an average increase at 1-2 percent, he added.

Kha said firms have not increased their prices sharply because current purchasing power in the market was still low. “However, the prices will continue to rise in coming months when the demand for products goes up.”

Tran Trung Hieu, general director of Hanoi Investment and Footwear Export-Import Company, which imports materials for footwear production and sells them to local producers, said he will increase prices to match the dollar hike.

However, he cannot raise prices under contracts signed months ago that are due to be delivered now. “We are suffering losses from the contracts,” he said. His company imports materials worth US$100,000-200,000 each month.

Meanwhile, the price hike has also affected a number of customers. “Some customers have cancelled their orders, while others have cut their buying volumes,” Hieu said. His company has had to lower its profits significantly to keep their traditional customers, he added.

The increase in costs of imported materials has also prompted many supermarkets to announce plans to increase their retail prices.

Nguyen Thanh Huyen, public relations manager for the Big C supermarket chain, said some distributors have proposed to raise their products’ prices by 5 to 10 percent.

Another supermarket chain, Maximark, has received proposals from over 100 distributors on increasing, by 3 to 10 percent, prices of 500 kinds of products, mainly food, cosmetics and home appliances.

The price increases have sparked inflation fears.

Vietnam’s consumer price index rose 8.18 percent in August from a year earlier, and 0.23 percent from a month earlier, the General Statistics Office said. In July, the index rose 8.19 percent from a year earlier.

“A very important implication is that the outlook for inflation is likely to be affected by the devaluation. The devaluation, of course, is going to raise the risk of imported inflation in the months ahead,” Bloomberg quoted Tai Hui, head of Southeast Asian economic research at Standard Chartered Plc in Singapore, as saying.

The dong will trade near 19,500 per dollar for “at least the next several weeks,” he said.

If inflation accelerates or the trade deficit deteriorates, “you may see more selling pressure on the dong. But, of course, that’s very much down to the upcoming data that we expect to see at the end of the month,” he said.

Vu Dinh Anh, deputy head of the Institute of Market and Price Research, said: “Inflation control should be the most important target for the end of this year. There is now a subjective complacence as consumer prices have only seen small hikes in recent months.”

The government aims to cap inflation at 8 percent this year, though many local analysts say that will be difficult to achieve.

Firms should carefully watch for changes in the exchange rate. They should prepare sources of the greenback to repay dollar loans on schedule, and use other foreign currencies, which have lower exchange rates, Anh said.