Domino effect hits Vietnam's economy

Hanoi (VNA) - The country dodged the direct impact from the global
financial crisis, but it is now beginning to be hit by the domino effects to
the world recession.

Producer and exporters are reporting that prices for many export products
including rubber, coffee, pepper, rice, and seafood are all seeing downward
trends.

The price of rubber sap has dropped from 58 million VND (3,400 USD) per
tonne to between 30-27 million VND. The Vietnam Rubber Association claims
producers must spend roughly 28-30 million VND to churn out a tonne of
rubber sap, while the product's sale price is currently only 27 million VND.

It is also proving difficult for producers to find customers at the price
of 27 million VND. This is different from previous years when rubber often
saw high prices and demand in October, say industry insiders.

With the cost of production being higher than sale prices, rubber
producers are stockpiling their product. Rubber producers of Dong Nai, Phu
Rieng and Dau Tieng , for example, say they have roughly 1,000 to 2,000
tonnes of rubber sap in stockpile.

General secretary of the Vietnam Rubber Association Tran Thi Thuy Hoa,
attributes the sharp decrease in rubber prices to the global financial
crisis.

However, general director of the Vietnam Rubber Industries Group Le Quang
Thung, expresses optimism about the industry's outlook.

The higher prices earlier this year can help rubber farmers and producers
to compensate for the current low prices, says Thung.

The domestic coffee industry is also experiencing a similar trend.

Coffee export prices fell from 2,000 USD per tonne last month to only
1,669 USD in the London Exchange due to the impacts of the global crisis,
says Doan Trieu Nhan from the Vietnam Coffee and Cocoa Association.

In the domestic market, the price for coffee currently hovers around 26
million VND (1,570 USD) per tonne, while last month it was over 35 million
VND (2,110 USD).

Industry insiders are concerned that coffee prices will continue sliding
with the beginning of the harvesting season at the end of October, which is
expected to yield about 1.3 million tonnes of product.

Prices of pepper sharply decreased by roughly 25 percent, according to the
Vietnam Pepper Association.

A kilo of black pepper in Ba Ria-Vung Tau province, one of the country's
leading pepper cultivation areas, has dropped from 60,000 VND (3.5 USD) to
roughly 38,000-39,000 VND.

Domestic rice farmers and exporters also have a significant volume in
stockpiles, due to difficulties in finding export markets, The price for a
kilo of 5 percent broken rice in the domestic market was reduced from
1,000-9,000 VND per kilo to 7,000 VND.

Seafood industry insiders are concerned that it may be too difficult to
meet the annual export target of 4.2 billion USD due to low demand for their
products in the global market, especially the US .

World demand is significantly reduced; several importers have even
cancelled contracts that were signed with Vietnamese seafood exporters,
says vice chairman of the Vietnam Association of Seafood Exporters and
Producers Le Van Quang.

Vietnam 's Ministry of Industry and Trade projected the country would
earn 15.7 billion USD from exports in the fourth quarter of this year. This
would mean that the country would earn about 5 billion USD for each
remaining month of the year, much lower than the monthly average figure of 6
billion USD in the third quarter.-Enditem