VASEP recommends reducing interest rates and extending debt for seafood businesses

The Vietnam Association of Seafood Exporters and Producers (VASEP) has recently compiled a report and proposed solutions to remove related difficulties for the seafood industry at present.

VASEP recommends reducing interest rates and extending debt for seafood businesses - 1 — VASEP proposes many solutions to remove difficulties related to the current stage of the fisheries industry. Photo: VASEP.

In the document, VASEP said that seafood enterprises mainly produce export goods, so they often borrow USD. Since the third quarter of 2022, many banks have announced and immediately applied an increase in USD loan interest rates from 2.1-2.8%/year to 3-3.3%/year and even up to 4.5%/year, and currently most of them are at a high level of 4.1-4.9%/year; some enterprises receive interest rates higher than 5%/year in the context of a decline in seafood production and export.

In addition to the high interest rates, seafood businesses are also facing other fees such as foreign money transfer fees (0.05%), L/C payment fees (0.1%), Bill endorsement fees (10 USD), document processing fees (10 USD), deferred L/C acceptance fees (50 USD), etc.

Along with that, manufacturing enterprises are the ones that need capital support for investment and development, but they also have to bear the additional burden of capping interest expenses for calculating income tax, which affects business results as well as cash flow of the enterprise in the first years of investment.

The restriction on lending below the credit limit granted, new loans are only disbursed in proportion to old loans when previous debts must be paid is also a matter of concern. The above difficult context has caused pressure and tension for seafood businesses.

VASEP has made the Association’s main recommendations for the above issues. Specifically, it is necessary to adjust USD loan interest rates to below 4%/year and VND loan interest rates to below 7%/year to support export enterprises.

At the same time, create conditions for seafood enterprises to extend debt repayment from 4 to 6 months for loans due in the second and third quarters of 2023 and continue to borrow according to the limit in the context of reduced exports in the first 6 months of the year so that enterprises can stably collect raw materials from farmers and fishermen and process and store goods to prepare for export in the following quarters of 2023.

Along with that, credit is directed to production and business, priority areas including aquaculture, high-tech agricultural enterprises; creating favorable conditions for aquaculture enterprises and high-tech agricultural enterprises to access credit capital to serve production and business and create a basis to promote livelihoods for the farmer-fishermen chain ahead.

Propose to amend Point d, Clause 2, Article 5 of Decree No. 132/2020/ND-CP to abolish the regulation that considers borrowing transactions between banks and enterprises borrowing long-term for investment as related-party transactions, helping enterprises not to be subject to a ceiling on interest expenses when calculating corporate income tax.

VASEP also recommended that the State Bank continue to pay attention and consider a stimulus package of VND10,000 billion for aquaculture in the Mekong Delta. The stimulus package is for export enterprises that actually buy raw materials in reserve from now for export in 3-6 months in 2023 and the first quarter of 2024, to cope with the situation of no export orders in the current period.

Implementing early stimulus will make aquaculture farmers feel secure to continue raising fish instead of suspending ponds at the current stage.

In addition, the Association also proposed reducing business costs through tax policies, fees, social insurance contribution rates and payment time; reducing costs, supporting production and business and import-export, maintaining supply chains and jobs; and resolving problems in regulations on fire prevention and fighting and investment procedures, and granting construction permits for old projects of enterprises.

(Source: Zing News)

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