Sugar firms ‘ruffle up feathers’ to shield interests

“The chairman of Hoang Anh Gia Lai Doan Nguyen Duc said bringing raw sugar into Vietnam for refining and then exporting to China would not affect the domestic market and would in fact help the country. My contention is that this action will hurt the local sugar industry,” Vietnam Sugar and Sugarcane Association (VSSA) general secretary Nguyen Hai told the media.

Hai argued that Laos sugarcane was very cheap, around $14 per tonne, and therefore sugar was also inexpensive to produce at around VND4.3 million ($206) per tonne, particularly given the Laotian government’s incentives for outbound investors.

In Vietnam, to ensure sugarcane growers maintain a stable income, local sugar factories have paid $45-$55 per tonne, increasing the total production cost by nearly $425-$520 per one tonne.

“Policy differences and HAGL’s strategic investments in Laos are resulting in HAGL’s sugar out-competing Vietnam’s sugar industry, as well as those of leaders such as Thailand and Brazil. None can compete in terms of price,” Hai said. 

“It is also possible that in exporting to China, HAGL will lower sugar price to gain market share. This would have a big impact on the domestic sugar industry,” he added.

According to the VSSA, allowing HAGL to sell raw sugar to Vietnamese firms for refining and exporting to China might condemn local sugar growers and businesses that are on the low-end of international integration. The impact could spread and even bankrupt the industry.

Nearly 40 VSSA members reportedly share this view.

“What happens if more sugarcane companies move their raw material production outside Vietnam? That would certainly hurt the market,” Hai queried

For these reasons the VSSA has proposed the prime minister not green-light the HAGL, Bien Hoa Sugar proposal to import raw material produced in Laos for local refinement and export to China.