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Yen devaluation troubles exporters

Update: May, 27/2013 - 10:28

 Compiled by Le Hung Vong

The Japanese yen has dropped by nearly 20 per cent over the Vietnamese dong in the last six months, leaving exporters worried about further losses if the currency continues to be devalued.

Cao Van Sang, general director of Sai Gon Plastics JSC, who exports plastic parts used in airport trolleys, said his company had agreed to reduce payments on contracts by 0.02 per cent, with the condition that payments be made in US dollar.

Previously, Japanese customers had wanted his company to receive payments for contracts in either yen or dong, he said.

Six months ago, the exchange rate fell from VND246.05 to VND205.34 on May 21, a fall of VND40.71 per yen.

The yen's devaluation has also affected Vietnamese exporters of farm produce.

Nguyen Pham Thanh, general director of Highland Dragon Co, which is based in Song Than IP No 1 in southern Binh Duong Province, said that local companies that manufacture canned tuna for the Japanese market had been hit by the yen's devaluation.

"The price of imported goods in general, and tuna products in particular, rose sharply in the past several months. This caused Japanese importers to re-consider signed import contracts," Thanh was quoted by Tuoi Tre (Youth) newspaper as saying.

Nguyen Van Kich, general director of the Hau Giang-based seafood joint-stock company Cafatex, said that Japanese buyers of Cafatex's shrimp were facing difficulties because selling prices had risen because of the yen devaluation.

"The price of imported shrimp from Viet Nam to Japan rose by more than 20 per cent. And, on top of that, the devaluation of the yen caused shrimp prices to rise by 40 per cent in the Japanese market," said Kich.

To avoid risks if the yen becomes stronger against other currencies, Japanese importers and distributors have changed their mode of purchasing from long-term contracts for large volumes of shrimp to smaller volumes after selling their stockpiles.

Nguyen Trung Dung, commercial counsellor at the Vietnamese Embassy in Japan, said he was worried about the growth in export turnover of Vietnamese goods in Japan this year.

According to the Trade Affairs Department in the Vietnamese Embassy in Japan, Vietnamese exports to Japan amounted to $3.6 billion in the first four months of 2013.

Major increases in Viet Nam's exports to Japan include a 15 per cent jump in wood products to $234 million.

Footwear exports rose to $121 million from $103 million in the first four months of 2012. Garment exports to Japan reached $697 million in the same period.

The department also reported a slump of $268 million in crude oil, $15 million in coal sales, and a 4.8 per cent drop in seafood exports from Viet Nam to Japan in the first four months of this year.

Rice buy mapped out

The Ministry of Agriculture and Rural Development (MARD) plans to buy 1 million tonnes of rice for reserve beginning June 15 over a two-month period.

The aim is to stabilise paddy/rice prices and to prevent a sharp drop in prices at harvest, which could lead to losses for farmers in the next summer-autumn crop.

According to MARD's figures, the southern region is expected to harvest more than 9.3 million tonnes of paddy, or more than 4.65 million tonnes of rice, in the coming summer-autumn crop that ends in late August.

Of that amount, at least 3.1 million tonnes of rice will be for sale, and the rest kept in reserve for national security and for future export.

From June until the end of the year, the country will keep 5.6 million tonnes of rice in reserve, including 3.75 million tonnes of summer-autumn and autumn-winter crops for export, according to Nguyen Ngoc Thua, head of MARD's Production Department for Agriculture-Forestry-Seafood Processing-Salt.

Thua announced the figures at a meeting held by the ministry in the Cuu Long (Mekong) Delta on Thursday.

A representative of the Ca Mau Department of Agriculture and Rural Development said the planned reserve purchase period, from June 15 to August 15, is not suitable for Bac Lieu and Ca Mau provinces, as the summer-autumn crop falls in mid-September.

Truong Thanh Phong, chairman of the Viet Nam Food Association, said that many provinces in the Cuu Long (Mekong) Delta would prefer to have reserve purchases based on global market demand and supply.

"The world market right now has a large volume of rice in surplus, which has forced Viet Nam to adjust rice production and reduce rice cultivation areas, and increase areas devoted to other crops," he said. "Viet Nam imports large volumes of maize and soybeans every year."

If the world market becomes more favourable for Vietnamese rice in June and July, the volume of rice for reserve purchase should be lower, said Phong.

A lack of proper facilities also hinders food companies from making plans to buy rice for reserve, he added.

To help farmers sell all the paddy harvested in the summer-autumn crop, delegates at the meeting asked MARD to increase the amount to 1.5 million tonnes and extend the time for purchasing since harvest times vary in different localities.

City plans restructuring

The volume of growth in HCM City's high-tech manufacturing sector, which has been a major exporter for the city, is expected to rise further under a master plan that will restructure the city's economy.

Under the plan, high-tech products and services would account for 40 per cent of the city's GDP by 2015.

With major markets in the US, Japan, the EU and ASEAN, the city's export turnover for high-tech products is predicted to rise nearly sixfold by 2015, compared with the $499 million of hi-tech exports in 2010.

Sai Gon Hi-Tech Park said it would target total exports of $10 billion by 2015.

Also, by that time, products made in high-tech parks would have 25 per cent of locally-made parts, and 40 per cent by 2020.

Since 2011, the city has been promoting its high-tech sector, particularly its support industry. More locally made parts can help meet the demand of major manufacturers like Intel and Nidec, it said.

The city has also scaled up projects to make more electronic and IT products at Sai Gon Hi-Tech Park, Quang Trung Software Park and other industrial parks in Tan Binh and District 7.

According to the city's Department of Industry and Trade, the IT sector had 63 per cent growth last year, with total turnover of VND86 trillion (US$4.1 billion), including VND78 billion in hardware and VND8 trillion in software.

The Sai Gon Hi-Tech Park's export turnover rose from $1 billion in 2011 to $2.1 billion last year, while Quang Trung Software Park attained local revenue of VND1.03 trillion ($49 million) and export turnover of $50.7 million.

During a meeting with a National Assembly delegation in April, the Department of Industry and Trade said exports of high-tech products from HCM City, such as computers, electronics and components, in 2012 reached $2.46 billion.

This was triple the previous year's figure and accounted for 11.4 per cent of last year's total exports in HCM City.

In the first four months of this year, the city's exports of hi-tech products rose to $654.8 million, an increase of 53.8 per cent compared with the same period last year.

Exports of electronics and components from HCM City are expected to reach $3.2 billion this year.

Major importers of HCM City's goods include Japan, Singapore, mainland China, Hong Kong and the US. — VNS

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