No business closures in Vietnam

Mega made the remarks after recent reports saying Taiwan businesses in Vietnam may shut down one after another, as a result of a declining Vietnamese dong, which has dragged down the country’s economy.

The bank pointed out that over 90 percent of local Taiwan businesses are exporters who will see little impact from the declining currency. According to Mega, most local Taiwan businesses use the U.S. dollar to conduct transactions and are therefore invulnerable to the tumbling dong.

Some businesses may even benefit from the depreciating dong, as they purchase raw materials in the U.S. dollar and sell the finished products in the greenback, except this time the currency is in a much higher value, Mega said.

Taiwan businesses who are most vulnerable to the tumbling dong is those who purchase raw materials in the U.S. dollar but sell the finished products domestically in the dong, Mega said. According to Mega, Vietnam’s debilitating economy was more of a structural problem caused in part by the country’s bubbling real estate industry and free-falling stock market. The country’s situation is similar to what Thailand experienced ten years ago, the bank said.

Against this backdrop, Mega’s Ho Chi Minh City branch will step up monitoring of currency exchanges, liquidity of assets and clients’ credit ratings as a risk management measure, it said.

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