The Saigon Times Daily: Do you see any problems right now with the sugar industry in Vietnam?

- Bernard Couteaux: The sugar industry needs to be modernized. There are, for the moment, three major problems in the sugar industry, as I have seen. First, the agronomical yield of cane is very low, compared to neighboring countries like Thailand. To give you just a figure, here in Vietnam, they are producing about 5 tons of sugar per one hectare of land, whereas in Thailand or Brazil, there is around 15 tons of sugar per hectare. The second problem is that there are a lot of very small capacity plants, which are not efficient in terms of either energy or sugar recovery. So they are losing a lot of sugar. The third problem is that the selling price of the electricity is very low in your country. Sugar plants can produce electricity that can be sold to the grid, and in quite substantial amount. But to invest in what we call the new generation plants, to produce this electricity, to have a good payback, you need to have a good selling price of electricity. And for the moment this price is very low. So it is not in favor of the sugar industry. EVN is buying electricity generated by the sugar plants at a very low price.

But people in Vietnam don’t have strong purchasing power and the Government wants to have a low electricity price for the population.

- I fully understand this. But when you produce electricity with the residue of the cane industry, instead of burning fuel or coal, it’s not only environmentally friendly but also economical since electricity is produced with bio-mass rather than with fossil fuels. I don’t know the selling price of the electricity of this national company to the households but I think there is a problem. Because on Wednesday, it is losing money, and the Government is underwriting its debts. Instead of underwriting the debts, it would be more efficient to use this money to help the sugar plants. And also electricity selling should be at market prices, not subsidized ones.

What should be done with the small sugar plants in our country?

- I think the Government has to help them improve the agronomical part by introducing new cane varieties. And this has to be done nationwide. Then, the industry has to consolidate. The many small plants must join forces together. You could close some small factories and build new, bigger ones by using the old equipments. We at De Smet have done that already in other countries. We have built new plants by using the old equipment from the small plants. Vietnam has a few big plants which are running well and making money, and a lot of small ones which are losing money.

Are you sure that small plants will consolidate over time? 

The Vietnamese market is more and more open to the world market. The plants that are losing money will either disappear or have to be consolidated. I’m sure that will come. I don’t know when it will happen, but the sooner the better. And also because sugar is an important commodity. We have seen all over the world that sugar consumption is increasing. Once the GDP per capita is increasing people will consume more sugar, more food, more soft drinks. Here in Vietnam, you are consuming about 10 kg of sugar per capita. The world average is 20, and a country like Thailand is at 30 kg. Sugar is an important commodity for a country like Vietnam. I can’t imagine that you will have to import sugar. You have the sun, the land... You have everything for a strong sugar industry.