Hanoi (VNS/VNA) – The shortageof capital is hampering the operation of many small cashew factories in Vietnam.

According to the Vietnam Cashew Association(VINACAS), 80 percent of small cashew processing factories have closed sinceJune due to lack of raw materials and capital for production, causing a majordent in the country’s economy.

This happened despite the cashewsector surpassing rice, coffee and rubber to make revenue of 3.6 billion USDlast year.

According to Nguyen Hue Chi Thai,a consultant to the VINACAS, factories operated with total capacity of 1.6million tonnes of raw material a year, creating jobs for hundreds of thousandslocals in southern provinces of Binh Phuoc, Long An and Dong Nai.

“With the current situation, thelabour force would lose jobs, move to other jobs, or return to their homeland.If we do not manage it quickly, it may break the planning of related industriessuch as pepper, coffee and rubber,” said Thai.

VINACAS Chairman Nguyen Duc Thanhhas asked cashew processing businesses to cooperate with each other to copewith changes in the market, keeping goods and avoiding selling out.

“According to information fromthe International Nut and Dried Fruit Council (INC), the price of cashew nut ispredicted not to decrease,” said Thanh.

He said the obstacle so far washow to seek capital to import 500,000 tonnes of raw materials for processingand exports from now until the end of 2018.

Thanh said since the meetingearlier this month between the VINACAS and bank representatives, almost allbanks had gone quiet, with no word as to whether they support 800 million USDin loans for cashew nut producers to import raw materials.

Ta Quang Huyen, Director of HoangSon 1 Joint Stock Company in the southern province of Binh Phuoc, said to solvethis problem, businesses could not wait for the banks.

“It’s because they will partlylose their customers, creating conditions for foreign businesses to seek newsupply resource and occupy the market. It will also be difficult for them tomobilise workers later if the factory is closed for a long time,” said Huyen.

“Therefore, many cashew exportproducers and exporters must sell processed products to the market at lowprices, accepting losses from raw materials imported at high prices from early2018,” he added.

Meanwhile, raw materialshipments, which were ordered by enterprises, are in the port or stored inbonded warehouses – stuck there because there is no money available to pay fortheir release.

Many of them lost deposit becausethey did not have enough money to pay.

“When the cashew businesses donot receive financial support from banks, they have to suffer a great loss. Thecountry’s export of cashew this year will not meet the target as scheduled,”said Huyen.

In response to the bank’s notgiving loans, Nguyen Quoc Phong, director of customer relations of the VietnamExport Import Commercial Joint Stock Bank (Eximbank) said that there was stillcapital support for the cashew industry.

However, according to the loanregulations of the bank, the business side must specify the fixed capitalcorresponding to the size of investment. Meanwhile, most businesses applied forloans with large scale of investment, but their registered capital was low.

In addition, the borrowingenterprises must carry out periodical audits, full financial reports and exportconditions of the enterprises corresponding to the actual capacity. When theloan application finalised the above criteria, Eximbank would be willing tosign for disbursement, said Phong.

“The VINACAS needs to supportbanks, listing the classification of enterprises as the basis for the banks’assessment to consider loan approval,” he added.-VNS/VNA