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Vietnam's coffee businesses reveal debt woes
Publication Date : 14-08-2013
Vietnam's coffee businesses were preparing to report their bad debts to the State Bank and related ministries by August 15, according to Nguyen Viet Vinh, general secretary of the Viet Nam Coffee and Cocoa Association (VICOFA).
Vinh said that the coffee industry had faced difficulties including a sharp decrease of 21-25 per cent in export prices from US$2,400 to $1,800 per tonne.
Coffee companies had been unable to turn a profit and subsequently incapable of paying off loans.
Ministries and agencies have instructed VICOFA to submit a detailed report and solutions for the problem.
VICOFA's members often struggle with high interest rates and competition from foreign direct investment businesses.
However, this is the first time VICOFA has asked its members to report on bad debt due to severity of the situation.
It estimated the association's total bad and outstanding debts with commercial banks and the Viet Nam Development Bank stood at 6.33 trillion dong ($300 million).
A number of large domestic coffee companies such as the Viet Nam National Coffee Corporation (Vinacafe), Vinacafe Buon Ma Thuot, the Thai Hoa Corporation and others have fallen into difficulties due to bad debts.
In addition, tax collection in several cities and provinces, especially in the Central Highland province of Dak Lak which has the highest coffee output, have been affected.
According to the Dak Lak Taxation Department, coffee and agricultural businesses contributed around 30 per cent of the province's total tax revenue with a total of 1 trillion dong ($47.8 million) a year.
In some districts, tax revenues from coffee businesses contributed up to 80 per cent of the total amount.
However, in the first half of the year, the province only collected 1.4 trillion dong ($66.6 million) in taxes, a drop of 18 per cent over the same period last year, and only 38 per cent of the annual target.