Abundant capital for seafood export

Expecting that purchasing power in major markets will recover by mid-year, seafood processing and exporting enterprises have been in need of short-term loans to prepare for orders right after Tet. For their part, banks in many localities have committed to providing sufficient credit capital.

Speaking to the Banking Times, Mr. Truong Dinh Hoe, General Secretary of the Vietnam Association of Seafood Exporters and Producers (VASEP), said that at present, the import demand of countries for the holiday season has been completed and they have to release their inventory before starting to place new orders. Therefore, many seafood businesses are waiting and preparing cash flow for the new business cycle.

Ms. Tran Thi Hoang Thu, Director of Business Division of Vinh Hoan Joint Stock Company, said that from November 2023, the EU has passed a new regulation that will impose a tax of 13.7% on pollock and cod from Russia. In addition, the US market is also considering a law that completely bans whitefish and seafood from Russia from being imported into the US. "This will be an opportunity for Vietnamese pangasius. Therefore, this is the time when businesses need to focus more on investing in raw material areas and purchasing and processing key products," Ms. Thu said.

In terms of credit demand, according to a representative of a seafood enterprise in Tien Giang, the EU market will likely not see a pick-up in purchasing power in Vietnam’s main seafood export market until June or July 2024. Therefore, at this time, businesses need revolving capital to purchase raw materials for orders after Tet.

In addition, this year, there is a possibility that many foreign enterprises will come to cooperate in processing seafood products in Vietnam due to the impact of China's ban on seafood imports from Japan. Therefore, investment activities in farming areas and competition for raw materials may be more active, which means the demand for medium and long-term investment loans will increase.

A representative of Vasep said that recently, maintaining credit limits and extending old debts by banks has helped many businesses recover their cash flow. “In the last quarter of 2023, banks also stepped up lending with a credit package of VND15,000 billion. Since then, many businesses have been able to access capital with reasonable interest rates,” said Mr. Truong Dinh Hoe.

According to records in the provinces of the Mekong Delta region, since the beginning of this year, the commercial banking system has been quite active in connecting to remove capital difficulties for businesses in the seafood sector. Mr. Vuong Tri Phong, Director of the State Bank of Dong Thap province, said that in the past time, the unit has continuously directed the credit institution system in the area not to reduce credit limits for seafood production and processing enterprises. "By the end of 2023, the total outstanding loans for seafood in Dong Thap reached over 13,300 billion VND. In the pangasius industry alone, businesses have been disbursed more than 7,500 billion VND in loans," Mr. Phong informed.

Similarly, in Can Tho, An Giang, and Kien Giang, the total outstanding loans for aquaculture, processing, and export of aquatic products in 2023 were all quite high. Specifically, in Ca Mau, banks disbursed about VND 29,296 billion in loans to shrimp and pangasius enterprises. Meanwhile, credit institutions in Kien Giang and An Giang lent about VND 14,588 billion and VND 13,543 billion to enterprises in this field, respectively.

The State Bank assigned credit growth targets to commercial banks at the beginning of the year and currently, short-term, medium- and long-term credit sources in banks are abundant, enough to meet the borrowing needs of businesses and participate in financing the linkage chains of aquaculture, processing and exporting seafood.

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