Seafood enterprises lack capital to buy production materials

Businesses recommend that banks create conditions for loans

Lack of capital to buy raw materials

According to the Vietnam Association of Seafood Exporters and Producers (VASEP), seafood exports had a remarkable recovery and development in 2022, reaching a turnover of US$9.5 billion by the end of October, an increase of 34% compared with the same period last year.

It is expected that by the end of November 2022, Vietnam's seafood exports will reach more than US$10 billion - a record milestone for Vietnam's seafood industry after more than 20 years of participating in the global market. With those efforts and results, it is expected that in 2022, Vietnam's seafood exports will reach nearly US$11 billion (up 25% compared to 2021).

However, as reflected by businesses, in the fourth quarter of 2022, seafood businesses have to face challenges with significant impact, causing difficulties and hindering the development of the seafood production and trading industry from the last quarter of 2022 and in 2023.

Since mid-2022, and especially in the present time, many branches of commercial banks have sharply cut credit to seafood enterprises. Although the credit limit  of many enterprises has only been disbursed 60-80%, it was not disbursed. This did many businesses with large capital needs to not have enough money to purchase materials for production. Therefore, they have to operate in moderation, affecting the growth and export of the industry. Some enterprises implementing seafood production projects even had to stop construction because of a lack of capital.

According to VASEP, businesses are aware that in the current situation, the management of monetary and credit policies is on the general balance to stabilize the macroeconomy. However, due to the unexpectedly strong growth in seafood production and export at the beginning of the year, it is difficult for enterprises to balance the increased capital without an adjustment to increase credit sources from banks, which helps them access credit and maintain growth in export activities.

To remove difficulties for businesses, VASEP proposed that the Government and the Ministry of Agriculture and Rural Development have solutions to raise credit levels for the industry in general and seafood exports in particular.

The State Bank has directed commercial banks to facilitate seafood enterprises to continuously access loans when seafood exports are on the way to recovery and growth, like now and next year, 2023.

The Government takes supportive measures to stabilize the prices of inputs for aquaculture, especially the prices of feeds, aquatic breeds, and energy prices for exploitation; adjust the USD exchange rate flexibly and appropriately, which is more beneficial for exports; and reduce domestic logistics costs.

Challenges and costs of environmental compliance

In addition to capital difficulties, seafood processing and export enterprises face many policy problems. According to the current national technical regulation (NTR) and the NTR draft about to be issued, wastewater from concentrated aquaculture ponds is being applied to the general NTR on industrial wastewater, while livestock has its standards. Therefore, industrial wastewater standards are not suitable for aquaculture. This is the required level that poses great challenges in agricultural wastewater treatment in general and aquaculture in particular. This is unnecessary and reduces the competitiveness of Vietnamese agriculture.

According to the NTR draft, industrial wastewater (QCVN-11/2015 abolition of aquatic product processing wastewater) stipulates the threshold of phosphorus criteria for aquatic processing wastewater after treatment is too low (only 4-6ppm, compared to 20ppm of QCVN-11/2015). However, it has not taken into account the specific factors of the industry, as well as the lack of technological solutions to meet the specific characteristics of aquatic wastewater. Currently, seafood enterprises face significant challenges and have not yet found the treatment technology.

Facing the shortcomings, seafood businesses recommended that there should be a separate and appropriate Wastewater Regulation for aquaculture; correction of regulations, especially phosphor norms. Therefore, TNR is drafting for seafood processing wastewater following actual conditions, technological capabilities, industry-specific factors, and regional practices in similar socio-economic countries.

Moreover, to overcome labor shortage, businesses proposed to provide land funds to build houses for workers and increase social welfare; urban-industrial park plans should consider worker housing and social infrastructure associated with industrial parks and a legal framework for enterprises employing foreign workers in necessary conditions.