Meanwhile, they carry high costs as interest rates increase. Therefore, they are suffering the risk of a reduction in revenue and losing competitive advantage.
This enterprise used to borrow foreign currency at an interest rate of 2%-3%. Since the State Bank of Vietnam released the regulation on limiting foreign currency loans, it has moved to borrow in Vietnam dong with an interest rate of 6%-9%. As such, the increasing costs have put pressure on the firm and it risks losing competitive advantage in the world market.
"FDI enterprises pay low interest rates, so they can push their input material prices higher than what Vietnamese companies can offer farmers. This causes difficulty for domestic exporters to compete and attract suppliers." - Do Ha Nam, Vice Chairman, Vietnam Coffee and Cocoa Association.
Besides export enterprises, farmers are also affected. Farmers use their coffee as collateral to get loans with an interest rate of 6%-7%. However, as enterprises are facing extra costs, they ask farmers for higher rates of interest.
"The interest rates were only 2%-3% before March 31st, and we gave farmers loans of 70% of their total product value at a 6%-7% interest rate. But now we have to borrow at 5%-6%, so the interest rate required from farmers should increase to 8%-9%." - Nguyen Nam Hai, General Director, Vinacafe.
"There should be reconsideration. Vietnam sets targets to increase export turnover. However, interest rates increase, causing difficulties for domestic export enterprises. Meanwhile, there are more favourable policies for imports." - Do Ha Nam, Vice Chairman, Vietnam Coffee and Cocoa Association.
In order to deal with those difficulties, enterprises are trying out various solutions such as expanding their market or increasing selling prices. However, in the long run, many enterprises worry that they will have to reduce their exports.
