The World Bank’s financing arm, International Finance Corporation (IFC), has decided to loan $14 million to two furniture makers to help boost their financial capacity and business.
Done deal: IFC officer Kham Doan (left) with Doan Van Trang of Khai Vy
Under the deals signed last week, the IFC agreed to lend $6 million to Khai Vy Corporation and $8 million to Theodore Alexander. Both the furniture makers are based in Ho Chi Minh City.
These are IFC’s first credits for companies in the wood industry, Kham Doan, an IFC investment officer said. “Vietnam has competitive advantage in this industry while Khai Vy and Theodore Alexander are big exporters. That’s why IFC wants to finance them.”
Although the interest rate of the loans remained undisclosed, Kham said the IFC will provide more than just the loan – it will also support these furniture manufacturers with regard to management, environment and market information.
Khai Vy general director Doan Van Trang said: “Furniture makers are in a stiff competition to access material success, so the funds provided by the IFC will be helpful for us as we can boost our working capital to ensure efficient reserve of wood.”
Trang said his company consumed almost 85,000 cubic metres of wood last year.
Established in 1995, the company has invested $11.5 million in four manufacturing facilities – one in Ho Chi Minh City and the other three in the central province of Binh Dinh. It also co-operates a saw-mill in the southern province of Binh Phuoc.
About 6,000 people now work at Khai Vy, whose output is all for export. It is able to generate monthly export revenue of $3.75 million from shipping 250 containers of indoor and outdoor furniture items.
The company’s export turnover was almost $37 million last year and is expected to reach $50 million this year.
Exports to the EU, including the UK, France, Germany and Spain, account for 70 per cent of its income, while America and several other markets take the remaining 30 per cent.
The UK-invested Theodore Alexander, meanwhile, now runs a factory in Ho Chi Minh City-based Linh Trung Export Processing Zone with more than 30 expatriates and 3,000 workers, according to IFC.
It sells most of its products to the US and is looking to expand shipment to the EU markets.
IFC is already been involved in 33 projects in Vietnam, including an investment of $25 million in seven institutions and loan syndication of more than $400 million for 26 projects. IFC alone has provided loans of $25 million for local companies in the private sector.