Thanh Thanh Dat Company (THADACO) is one of pioneers in forestation in Nghe An province. Vietnam Business Forum interviewed Director Tran Quang Luan on difficulties facing the private sector in getting international credit sources, particularly Asian Development Bank (ADB).
ADB has many policies prioritising forestation and wood processing. What are THADACO’s plans to get access to this capital source?
One of ADB’s priority areas is private firms and small and medium-sized enterprises operating in the agricultural sector. Credit funds will support the development of agricultural sector related to the environment such as forestation, wood processing and production and export of farm products and projects which target to create jobs. However, over the past years, many companies in the agriculture sector have found it difficult to receive preferential loans from foreign sources such as ADB for businesses and production expansion. We have tried much to get assess to this capital source, but it’s impossible.
Getting priority policies for forestation of ADB will help us to fulfill goals to cover bare hills and provide materials for our wood processing factories and others. This is expected to make breakthroughs in forestation.
Which capital source is the company getting? Which difficulties does your company cope with during the capital mobilisation?
THADACO operates in many areas and has 24 units and factories across Vietnam and Laos. The major areas of the company are forestation, processing and exporting forestry products. It gained an export value of US$38 million in 2010 and the figure is expected at US$60 million in 2011. To ensure the long-term material source for processing factories, Thanh Thanh Dat has built a centre to produce high-quality saplings centre by cell transplant, the largest of its kind in the northern and central regions and also growing 9,000 ha of forest in Nghe An, 10ha of forest in Laos’Bolykhamxay Province. Therefore, capital factor is very important for its business and production activities. Besides its own capital, the company has to get loans from commercial banks in the province.
Nevertheless, the term of these loans is often just five years, not long enough to ensure a cycle of forestation for materials. Additionally, the interest rates are very high and changing, restricting efficiency of capital use. It is also difficult for the company to get loans in foreign currencies for its overseas investments because the loans are not allowed to surpass half of a project’s total investment.
The upcoming 44th ADB’s Annual Meeting will be a chance for companies to express their new business ideas. Could you disclose your company’s new projects and proposals to ADB in particular and international credit organisations in general?
Thanh Thanh Dat has 22 factories and affiliates across Vietnam and Laos. Last year, the People’s Committee of Nghe An Province handed over 4,800 ha of forestry land for a forestation project. To date, it has used 980 ha.
In the first two months of 2011, the Lao government gave 10ha of forestry land in Bolykhamxay Province for rubber and wood cultivation. The company has planned to grow trees on 990 ha in this area. The company is building a high-quality saplings garden in Nghe An Province’s Thanh Chuong District to produce 2 million saplings per year from cell transplanting. They are three big forestation projects being implemented by the company. The company is also building two apartment projects in Vinh City, one urban project in the south of Lam River and an office-for-rent project in Vinh City.
With these projects, Thanh Thanh Dat expects to get capital sources from international organisations, particularly for forestation and woof processing activities with longer terms and stable interest rates.
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