Vietnam: Rising input costs turn screw on local firms

Local businesses are trying to stay afloat amid spiking input prices.

Agifish Management Board Chairman Ngo Phuoc Hau said his firm used a huge volume of power and petroleum for production and their cost increases would hurt.

Cashews and coffee exporters were in the same boat. Many businesses reportedly signed export contracts several months ago and they could not alter pricing terms amid recent rising input material costs.

Vietnam Assoication of Seafood Exporters and Producers (VASEP) general secretary Truong Dinh Hoe said: “Electricity and petrol hold a large proportion in processed seafood input costs. Therefore, recent price upsurge would certainly push up our production costs.”

He added that exporters would incur big losses for earlier signed contracts.

Estimates show that recent electricity and petroleum price upsurge would add 10-15 per cent to businesses’ input costs.

To address the situation, export businesses are drawing plans to save power, rationalise production or innovate equipment and technology.

Viet Han Agricultural Products Export Company deputy director Dao Thu Thuy said: “Cost-saving solutions like investing in energy efficient equipment or carrying production in off-peak hours are great, but require big investments.”

Vietnam Coffee-Cocoa Association chairman Luong Van Tu suggested firms boost the export of items with high added value instead of raw agricultural produce to raise export value.

For importers, besides rising input costs, they faced difficulties in sourcing US dollars.

Animal Production Processing Import-Export Joint Stock Company (Aprocimex) general director Doan Trong Ly said the sourcing of greenbacks remained difficult after the State Bank’s exchange rate upward revision.

Ly said his firm failed to source sufficient greenbacks for the payment of forthcoming shipments.

Aprocimex also faces delaying two production projects due to lack of greenbacks for importing equipment.

Ly forecast animal feed prices would add 10 per cent from next month after the dong’s devaluation against the US dollar and rising power and petroleum prices.

Source: Vietfish

at

http://www.vietfish.org/2011030809105984p49c82/rising-input-costs-turn-screw-on-local-firms.htm

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