Seafood industry faces capital shortage at the end of the year
doyen1988 12-08-2022, 10:01
Seafood industry faces capital shortage at the end of the year

Overview of the Conference on the morning of August 11 at the Government Office. Photo: VGP.

Opportunities alongside challenges

At the Prime Minister and businesses' Conference to "Proactively adapt, recover quickly and develop sustainably", Mr. Nguyen Hoai Nam, Deputy General Secretary of the Vietnam Association of Seafood Exporters and Producers (VASEP) reported that 279 association members are contributing at least 80% of the total national seafood export turnover.

The seafood industry recorded many positive signals in the first 7 months of 2022. The most significant of which is the highest export level in the past 20 years, at 6.7 billion USD, an increase of 35% over the same period in 2021. This has placed Vietnam in the top 3 seafood exporting countries, after China and Norway.

Another positive sign is the participation rate of domestic businesses. In the general structure of the economy, domestic businesses only account for 26 to 30% of total export turnover. In the seafood industry, this figure increases to more than 95%.

Based on the current internal resources as well as the market space of the seafood industry, Mr. Nam forecast that Vietnam will surpass the export milestone of 10 billion USD for the first time, which is an increase of 12 to 15% over the same period. Aquaculture products including Shutchi catfish and shrimp accounts for about 65% of the total export turnover. 

Shutchi catfish, a staple of Vietnam's seafood, is dominating 95% of the global whitefish source, equivalent to an increase of 80% in the first 7 months of 2022.

"There is still a lot of market space for seafood. Vietnam has a lot of opportunities. But to achieve such a goal with regards to both sustainable development and international competition, we also face many challenges", Mr. Nam shared.

Mr. Nguyen Hoai Nam, Deputy General Secretary of VASEP speaking at the meeting with the Prime Minister on the morning of August 11. Photo: VGP.

Two main difficulties raised by VASEP at the Conference with the Prime Minister were production and logistics costs.

According to Mr. Nguyen Hoai Nam, animal feed increased by an average of 20% compared to before the Covid-19 pandemic. This has a negative impact because animal feed is accounting for 65 to 70% of the semi-finished product price of Shutchi catfish and shrimp. 

Regarding logistics, shipping costs and labor have increased continuously in the past 2 years. VASEP reported that the shipping fee for 1 container to the US West Coast is estimated at 400 million VND; to Europe is from 230 to 280 million. The related input costs such as packaging, chemicals, transportation, integration, etc have all increased.

"We recommend the Prime Minister and ministries to pay attention and take measures in supporting and directing the removal of costs for the business community, including animal feed", Nam said.

Concerns regarding capital and environment

Regarding the orientation for the last few months of the year, Mr. Nguyen Hoai Nam raised concerns regaring the environment and capital. VASEP said that two areas of the seafood industry, livestock and processing, are currently congested by environmental problems, namely the output wastewater.

"The output wastewater is not listed under the livestock standards but other standards. Many criteria are not suitable for shrimp and fish farming, such as the regulation for organic phosphorus treatment in frozen seafood processing", Mr. Nam raised the problem.

Regarding capital, credit in most countries around the world has tightened since the beginning of August, consumer demand has decreased. As a result, many seafood businesses cannot new receive orders until October and have to handle inventory.

Shutchi catfish processing for export. Photo: Nguyen Thuy.

"If there is no capital to pay off existing loans to the bank, businesses are not allowed to apply for a new loan; which in turn has rendered them unable to buy fish and shrimp from the farmers", Mr. Nam continued.

Sharing the same concern about capital, the Vietnam Textile and Apparel Association shared the difficulty of financial balance due to the value-added tax refund. On the other hand, the Vietnam Association of Construction Contractors reflected that construction businesses were not given the same priority as those in the production business, so most of them were refused bank loans under the reason of "running out of room", or loans with high interest rates.

These difficulties were emphasized by the Minister of Planning and Investment Nguyen Chi Dung. He suggested ministries, departments and branches to urgently remove long-standing legal obstacles and barriers.

Commitment to accompany businesses

Listening to the businesses, Minister of Agriculture and Rural Development Le Minh Hoan said that, along with the seafood industry, domestic businesses account for an outstanding proportion in the forestry industry as well as other agricultural products.

Mr. Le Minh Hoan also expressed his opinions for the near future to businesses and industry associations: "We wish for the companionship, creation, and development of agriculture and rural areas. We believe that the Ministry alone cannot improve the internal problems of the agricultural sector; and the path of agricultural development requires associations, industries, and businesses operating in the field of agriculture.

After acknowledging that businesses, associations, and industries are not subject to management, Minister Le Minh Hoan considers them as partners to go hand in hand from the draft policy, mechanism, regime to the development planning for the sector.

Minister of Natural Resources and Environment Tran Hong Ha answering questions on waste treatment in the seafood industry. Photo: VGP.

To elaborate on the issue of waste treatment in the seafood industry, Minister of Natural Resources and Environment Tran Hong Ha said that Vietnam's environmental quality must be in harmony with the markets where Vietnam is trading and conducting businesses. That is the premise to participate in global trade and overcoming trade barriers.

"If we do not have standards and regulations on the environment suitable for other markets, it will be difficult, and there will be barriers such as climate change as well as a multitude of other issues" said Mr. Tran Hong Ha.

Regarding credit interest rates, State Bank Governor Nguyen Thi Hong addressed difficulties in the current inflationary period. Loaners want reduced interest rates, but depositors need to have an appropriate interest rate for the present.

"The State Bank promises to administer monetary policy to control inflation, stabilize the macro-economy, stabilize the foreign exchange currency market, and ensure the safety of credit institutions", Ms. Hong emphasized.

Concluding the conference, Prime Minister Pham Minh Chinh proposed 6 short-term tasks and 3 long-term solutions. The most important factor for businesses to do business effectively and sustainably is the people, in addition to technology and business methods and models.


Author: Bao Thang

Translated by Nguyen Hai Long

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