The COVID-19 pandemic has significantly impacted the seafood industry, causing a decrease in export value, delayed payments from customers, and high-interest rates on loans. Domestic seafood enterprises in Vietnam have proposed various financial solutions to help them overcome these difficulties in production and business, according to the Vietnam Association of Fisheries (VASEP).
Impact of COVID-19 on Seafood Export
Vietnam has experienced a strong reduction in seafood export value in the first two months of this year due to the COVID-19 pandemic. With the disease still spreading across the world, the negative effects on the country’s seafood exports are expected to continue.
The prolonged shipping time has led to slow seafood export activities to Asian markets such as China, Japan, and South Korea. Furthermore, strict lockdown measures in many countries have led to a sharp drop in out-of-home consumption of seafood in those markets, especially high-price seafood products.
Challenges Faced by Vietnamese Seafood Enterprises
Vietnamese seafood enterprises are facing difficulties with production and business, due to a large inventory of seafood products and delayed payments from customers. These challenges have resulted in a great impact on payment for their loans in March, April, and May.
At present, many seafood enterprises in Vietnam require loans from banks, but the interest rates on these loans are high. Medium- and long-term loans from large commercial banks have an annual interest rate of 7 percent, and small commercial banks have a rate of 10.5 percent. Vietnamese đồng loans have an interest rate of 6-8.5 percent, and US dollar loans have a rate of 4-4.5 percent.
Financial Solutions Proposed by Vietnamese Seafood Enterprises
After a meeting with the seafood enterprises, VASEP has collected the financial solutions proposed by them to deal with the existing difficulties.
They have suggested that banks should provide loans with suitable interest rates ranging from 3 percent to 6.5 percent for Vietnamese đồng loans and from 1.5 percent to 2.8 percent for US dollar loans. The seafood businesses have also asked the banks to reduce procedures and conditions for lending and disbursement of loans. Additionally, they have requested banks to give them loans to store goods for consumption after the pandemic ends.
The seafood enterprises have recommended that banks extend payment deadlines by 2-3 months for debts. They expect free transfers at banks and reductions of 50 percent for transfer fees to other banks. They also hope to enjoy free transfers from foreign banks to their accounts at local banks.
Moreover, the businesses have suggested exempting or reducing fees for financial services and business activities, including free services during transactions at banks and fee reductions for services relating to import and export activities.
The COVID-19 pandemic has created various challenges for Vietnamese seafood enterprises. However, they have proposed several financial solutions to cope with these difficulties, including suitable interest rates, reduced procedures and conditions for lending, extension of payment deadlines, and exemptions or reductions of fees for financial services and business activities. These measures can help the seafood enterprises continue their production and business activities during these challenging times.