Last update 12/11/2010 05:29:56 PM (GMT+7)
High bank interest rates, high production costs for businesses
VietNamNet Bridge – Higher dollar, higher loan interest rates, higher prices of input materials and weak purchasing power all have made businesses worried.
In an effort to curb the inflation, the Government is making efforts to reduce money supply to ease the pressure on prices. However, analysts have warned that this will hurt production companies which are normally dependent on credit.
Businessmen have also said that any measure adopted by the central bank to cope with high inflation will result in an increase in both deposit and lending interest rates.
The lending interest rate hike will put manufacturers and traders in a difficult position, in terms of their expenses including the import of raw materials
Doanh Anh Tuan, Deputy General Director of ITC, an investment and trade company, said that the demand for borrowing capital from ITC in particular and Vietnamese businesses in general is now very high, because they are now making products for Tet sale season. Meanwhile, the lending interest rates are on the rise, thus putting hard pressure on production.
According to Tuan, ITC has to import input materials in big quantities to serve the local production, therefore, it has a high demand for dollars. Tuan said that since the beginning of the year, ITC has lost $2.5 million after two dong/dollar exchange rate adjustments.
ITC now has 300 billion dong of working capital, 30 percent of which comes from bank loans. Therefore, the interest the company has to pay for the loans will be a big burden.
Representative from a fibre export company in Da Nang said that anticipating the possible cotton price increases in the world market, his company plans to import a big volume of cotton for the upcoming production season. However, the company still cannot borrow dollars from banks, while the cotton price is escalating every day.
Secoin, which specializes in making and trading construction materials, has decided to delay some investment projects, because it does not want to risk borrowing too much when the lending interest rates are overly high.
Garment companies said that though there are many orders from foreign partners and the export prices have increased by 15-20 percent, they are still facing a lot of difficulties due to the higher production costs. Ho Le Hung, Deputy General Director of Hanosimex, said that even when export companies can enjoy higher export prices, they cannot pocket much money, because they have to pay for import materials.
In 2010, Hanosimex plans to export over $30 million worth of products. However, in order to obtain the export turnover, the company will have to import nearly $30 million worth of input materials.
Hung complained that it is now a very difficult period for businesses, and that Hanosimex despite getting privileged treatment at banks as their loyal customer has to think carefully before deciding to borrow money, , because the current interets rates are toohigh.
Source: Dau tu
In an effort to curb the inflation, the Government is making efforts to reduce money supply to ease the pressure on prices. However, analysts have warned that this will hurt production companies which are normally dependent on credit.Businessmen have also said that any measure adopted by the central bank to cope with high inflation will result in an increase in both deposit and lending interest rates.
The lending interest rate hike will put manufacturers and traders in a difficult position, in terms of their expenses including the import of raw materials
Doanh Anh Tuan, Deputy General Director of ITC, an investment and trade company, said that the demand for borrowing capital from ITC in particular and Vietnamese businesses in general is now very high, because they are now making products for Tet sale season. Meanwhile, the lending interest rates are on the rise, thus putting hard pressure on production.
According to Tuan, ITC has to import input materials in big quantities to serve the local production, therefore, it has a high demand for dollars. Tuan said that since the beginning of the year, ITC has lost $2.5 million after two dong/dollar exchange rate adjustments.
ITC now has 300 billion dong of working capital, 30 percent of which comes from bank loans. Therefore, the interest the company has to pay for the loans will be a big burden.
Representative from a fibre export company in Da Nang said that anticipating the possible cotton price increases in the world market, his company plans to import a big volume of cotton for the upcoming production season. However, the company still cannot borrow dollars from banks, while the cotton price is escalating every day.
Secoin, which specializes in making and trading construction materials, has decided to delay some investment projects, because it does not want to risk borrowing too much when the lending interest rates are overly high.
Garment companies said that though there are many orders from foreign partners and the export prices have increased by 15-20 percent, they are still facing a lot of difficulties due to the higher production costs. Ho Le Hung, Deputy General Director of Hanosimex, said that even when export companies can enjoy higher export prices, they cannot pocket much money, because they have to pay for import materials.
In 2010, Hanosimex plans to export over $30 million worth of products. However, in order to obtain the export turnover, the company will have to import nearly $30 million worth of input materials.
Hung complained that it is now a very difficult period for businesses, and that Hanosimex despite getting privileged treatment at banks as their loyal customer has to think carefully before deciding to borrow money, , because the current interets rates are toohigh.
Source: Dau tu
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