Rice exporter Cambodia-Vietnam Food Company said joint venture partner and Vietnamese state-owned Vinafood 2’s possible bankruptcy over $40 million of debt will not hurt its business prospects in the Kingdom.
Cavifoods is a joint venture between state-owned Green Trade Company and Vietnamese companies Southern Food Company, or Vinafood 2, and the Cambodian Investment and Development Company, and exports rice grown by Cambodian farmers.
Thon Virak, former director general of Cambodia’s state-owned Green Trade and currently senior official with the Ministry of Commerce, said he was not aware of the development and said Cavifoods was unaffected by Vinafood’s financial troubles.
“Cavifoods is operating very well – keeping up export of milled rice for foreign countries every year.”
However, he said, there may be some changes if one of the joint-partner is facing financial trouble.
“Sure, there will have some effect [Cavifoods]. But, we [Green Trade] will not get any effect due to under the venture; we provide them only the land for the milling and warehouses.”
Virak said that while he didn’t have any details currently, he would contact Vinafood in Ho Chi Minh City to get an update on the situation.
According to VietNamNet, 19 of Vinafood’s 44 subsidiaries reported losses in 2014, with Tra Vinh Food Company and TRAVIFACO posting losses of $7.67 million and $6.27 million, respectively.
Vinafood 2 is facing bankruptcy over $40 million debt it undertook as a result of inefficiencies in the operations of its subsidiaries.
Vinafood 2 posted $432 million in losses last year due to the breeding, processing and exporting tra fish, as well as losses from inter-subsidiary lending arrangements.
The company had to bear a loss of $4.66 million because a few of its subsidiaries defaulted on bank loans.
According to Tran Bac Ha, chairman of the Bank for Investment and Development of Vietnam, who spoke during the company’s launch in early April 2012, the company targets exporting 250,000 tonnes per year by 2015.
As of last year, Cavifoods had exported around 6,000 tonnes of milled rice, ranking 20th out of more than 50 milled rice exporters, according to ministry of agriculture.