The Vietnam
Sugar and Sugar Cane Association is consulting with its members on the establishment of a trade
company which is hoped to help stabilize the sugar prices.

Sugar
refineries lack capital to maintain their production. The business performance
goes up and down all the time. When the supply gets profuse, the sugar price
goes down and merchants do not want to store sugar. Therefore, sugar refineries
and sugar cane growers do not feel happy with big crops. Meanwhile, there
always exists a big gap between the price set up by refineries and the price
defined by distributors.

All
those
problems of the
Vietnam Sugar and Sugar Cane Association are hoped to be settled with a sugar trade and service
joint stock company; if established, would be charge of stabilizing the domestic
prices. The association has opened the draft charter of the company for opinion
collection from member companies.

The
most important functions of the company will be stabilising the domestic prices, effectively mobilising and
using capital for the business in order to create profits, create stable jobs, help improve the working
conditions and improve the living standards of workers and ensure the interests of
shareholders.

The
operational scope
of the company will be trading sugar and sugar made products, storing sugar products in
order to stabilize the domestic market, importing and exporting sugar
products and other kinds of materials and equipments serving the sugar
production and sugar cane growing.

The
company has the chartered capital of 100 billion dong which will be divided into
10 million shares, each of which will have the face value of 10,000 dong. All
the shares to be issued for the first time will be ordinary shares, which have
the right to vote. After five years of operating stably, the company may issue
additional shares to outsiders.

The
founding shareholders are the representatives from the Vietnam Sugar and Sugar
Cane Association, companies and sugar refineries with the capacity of over
30,000 tons a year. The founding shareholders will have hold at least 20
percent of the total shares which can be offered for sale. Statistics released
after the 2010/2011 crop show that there are 14 sugar refineries, including
five foreign invested ones, which can meet the requirements

Pham
Thi Sum, Chair of Bien Hoa Sugar Company, said that in fact, the sugar
association has been cherishing a plan on setting up such a company for the
last many years. However, to date, such a company has not come out yet.

The
information has been confirmed by former Secretary General of the association
Ha Huu Phai.

However,
Sum does not think that it is necessary to set up a trade company which bears
the function of stabilising the domestic market. She believes that sugar
refineries just need to take care for the production, while the distribution should
be undertaken by other enterprises.

“If
all the producers in the national economy set up their own distribution networks, this will lead to a chaos, while
the model proves to be ineffective, because producers will have to cover too
many kinds of expenses,” Sum said.

She
went on to say that the sugar prices on the domestic market should be defined
by the supply and demand basis. The pricing should be reasonable to ensure the
profits for all involved parties, from sugar cane growers, sugar refineries and
consumers.

Meanwhile,
Bui Thi Quy, Chair of Van Phat Group, thinks that setting up a trade company is
a good idea. In this case, refineries will only have to take care for
production, and they will be able to send their products to the trade company which
will be in charge of distributing the products.

In
case the supply is too profuse, the trade company will store sugar products
instead of putting into circulation. As such, the company will not only help
sugar refineries distribute their products, but also help stabilize the
domestic prices.

Also,
Quy said, the company will also help mobilize capital to help the member
companies in difficulties. This will help stabilize the supply and demand.
Especially, this will allow to prevent contraband sugar to flood into Vietnam.
It is estimated that every year, Vietnam fails to collect 500 billion dong in
tax from smuggled sugar.

Source: TBKTVN