Coffee traders moan over dollar loans
13-MAY-2008 Intellasia | Vietnam Investment Reviews page 15
May 13, 2008 - 7:00:00 AM
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Coffee exporters have complained they will be hurt by a new decision issued by the central bank to limit their access to dollar loans.
The State Bank's Decision 09/2008/QD-NHNN, effective since April 25.2008, stipulates that local exporters are only provided with loans in dong.
"The decision is quite unreasonable because it will strangle the local export sectors, including coffee. It will also likely mar the coffee sector's target of earning export turnover of US$1.8 billion this year," said Doan Trieu Nhan, a Vietnam Coffee and Cocoa Association (Vicofa) senior specialist.
He explained that as dong lending interest rate currently hovered around 19% per year, exporters were encountering skyrocketing costs.
"The decision is harmful to us because nearly all coffee exporters were closely linked with bank loans," said Vu Duc Tien, director of Vietnam's largest coffee exporter, Tay Nguyen Coffee Investment Import-Export Joint stock Company.
Tien said coffee traders had already suffered from other increasing costs, including input material prices and trasportation charges. Higher dong lending interest rate will therefore add to the woes.
Vietnam has more than 100 coffee exporting companies. More than 40 are located in the Central Highlands, where roughly 90% of coffee area is cultivated. Coffee is one of the country's biggest export earners.
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