HAGL Joint Stock Company (HAGL) has been in talks over the possibility of selling its sugar plant in Laos to TTC Group (TTC), a source close to the matter said.

The source told the Daily that HAGL may sell the plant to TTC partially or wholly. The two parties are expected to inform their shareholders of the planned deal some time next month. 

A source from TTC confirmed the two enterprises have discussed the deal but declined to give further details. 

HAGL used to sell raw sugar produced at its plant in Laos to TTC for refining. At present, HAGL imports part of its output at the Laos sugar plant into Vietnam for sale and the volume stood at 50,000 tons last year. This year, the Ministry of Industry and Trade has set an import quota of 30,000 tons of sugar from Laos and the figure will remain the same in 2017.

According to HAGL’s financial report announced on August 23, the firm racked up losses of more than VND1.07 trillion (US$48.2 million) in the first six months of this year. In the same period last year, it reported profit of VND1.04 trillion.

In 2013, the company said it would invest US$68.7 million in a thermal power plant and another US$19.1 million in a sugarcane farm in the neighboring country. Its sugar mill has a daily capacity of 7,000 tons. 

HAGL chairman Doan Nguyen Duc told the 2013 general meeting that the company used advanced technology and a drip irrigation system in the farm. Therefore, its sugar cost VND4.32 million a ton, or one-third of the average price offered by plants in Vietnam.

A number of local firms used to express concerns over HAGL’s investment in the sugar sector in Laos, saying it would pile pressure on Vietnamese producers and affect thousands of farmers here in the country. 

Duc said HAGL’s sugar would be sold to European nations as it makes the product in Laos which benefits from the EU’s General System of Preferences (GSP). Under the GSP, all products, except for weapons, enjoy a zero tariff when they are exported to the EU.

HAGL petitioned the ministry to apply a tariff of 0% instead 85% on sugar imports beyond the annual quota. In end-May last year, the ministry issued Circular 08/TT-BCT permitting HAGL to pay an import tariff of 2.5% for its Lao-made sugar but it was applied to a volume of 50,000 tons.

SGT