ASEAN KEY DESTINATIONS
High interest rates trouble luxury companies
Minister Vu Huy Hoang, who chaired the meeting held to discuss difficulties plaguing the economy, noted the sluggish growth in the steel industry and blamed it on low demand.
Garment exports in May saw a 35 percent increase in value year-on-year, but profits dipped, deputy managing director of the Viet Nam Textile Group (Vinatex) Nguyen Tien Truong said.
Cotton and fabric prices had skyrocketed by 260 and 44 percent respectively, he said.
"Garment exporters need large loans to buy materials for production, and so they can only afford to stock inputs for one month because of the high interest rates," he said.
The HCM City Department of Industry and Trade also complained about the high interest rates and input costs that have almost brought production by leading manufacturers to a halt.
Food companies are not making large purchases of rice from farmers despite the Government's recommendation due to the credit squeeze, according to the Southern Food Company. They are instead waiting for rice prices to drop to make purchases.
Many borrowers had switched to loans in dollars since they could not afford the interest rates on dong loans, the company said, adding, however, it was difficult to get dollar loans.
Hoang said the ministry would continue to dissuade import of unnecessary items to rein in the trade deficit which has reached US$6.6 billion, or 19 per cent of total imports, in the first five months.
He expressed satisfaction at the new measures the ministry imposed this month to control imports of cars, alcohol, cosmetics and mobile phones, saying they were needed both the long and short terms and did not breach the country's WTO commitments.
Viet Nam imported on average 30,000 cars of nine seats or less every year at a cost of $1billion, he said. Thus, the ministry's move against imports of such cars only affected 30,000 users a year, he said.
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