VietNamNet Bridge – Sugar companies have begged for the government’s urgent interventions in terms of tax rates, sugar import quotas, trade fraud control and cross-border exports to protect domestic enterprises which are at the death point.
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Bui Thi Quy, President of the Long My Phat Sugar and Alcohol Company in Hau
Giang province, on December 4 affirmed that the company has shut down the sugar
refinery.
The other sugar refineries in the Mekong Delta provinces have been operating at
a moderate level. The Vietnam Sugar and Sugar Cane Association has called for
the government’s urgent help.
Quy said that the domestic sugar prices have dropped dramatically. As a result,
the more the refinery put out, the bigger loss it suffered.
At present, the production cost of every kilo of sugar is 13,500 dong. If
counting on the expenses on inventories and bank loan interest rates, a kilo of
sugar would bear the cost of 500 dong more. Meanwhile, sugar companies just can
sell at 13,700 dong per kilo.
“We had to borrow money at overly high interest rates, while we had to sell
sugar at low prices. The high inventories have made the sugar production costs
higher, which then would make it even more difficult to sell,” Quy said,
explaining the vicious circle that sugar companies have fallen into.
“So, we have decided that it would be better to halt the production, and we
would only open the refinery again when the sugar prices go up,” Quy said.
Nguyen Thanh Long, Chair of the Vietnam Sugar and Sugar Cane Association, said
Long My Phat is not the only sugar refinery that meets difficulties.
By the end of November 2012, the inventory volume had reached 110,000 tons, or
60 percent higher than that of the same period of the last year.
Though it is now the high sale season, the wholesale prices in Mekong Delta are
hovering at 13,700-14,600 dong per kilo only, or 4000 dong per kilo lower than
that of the same period of the last year. Most sugar refineries said they incur
the loss of 500-1000 dong per kilo when selling at the price levels.
The sugar price has tumbled because of the sharp fall of the demand for sugar
for making food, estimated by 15-20 percent.
However, sugar refineries and traders have been blamed this on the smuggled
sugar imports from Thailand which are cheaper than domestic products.
A kilo of Thai sugar is now retailing at 13,800 dong per kilo, which explains
why domestic products have been left unsold.
“Long My Phat has shut down its refinery. Meanwhile, the plants in Ben Tre, Tra
Vinh, Soc Trang and Hiep Hoa have been operating at a moderate level,” Long
said.
In its document to the government, the sugar association begged for the
government’s urgent interventions in terms of tax rates, sugar import quotas,
trade fraud control and cross-border exports.
Especially, the association emphasized that the failure in preventing smuggled
imports from entering Vietnam has put big difficulties for domestic sugar
refineries.
It is estimated that 400,000-500,000 tons of smuggled sugar would be brought to
Vietnam this year, which is equal to 30 percent of the domestic total
capability. The imports which have been sold at the prices lower than domestic
products have been dominating the southern market and a part of the northern
market.
In fact, sugar refineries are believed to shut down sooner or later. If they do
not stop production now, they would have to do this after Vietnam opens the
market under the AFTA commitments and reduces the import tariffs, slated for
2017.
SGTT