Thailand's sugar
industry invests:
Low supply and high prices likely in near future (Part II)
By Jon Fernquest
Sugar
prices are rising worldwide.Thailand as the second largest sugar exporter in the world is preparing for this business opportunity with regional investments in Laos and Cambodia.
This is the second part of a large article (Read part one of article)
Economics
ASIA FOCUS
Sweet success ahead
8/02/2010Kamamol Pongthanee
...Having successfully operated sugar mills in the challenging market of China, Thailand's leading miller, Mitr Phol Group, is looking to expand its operations in Cambodia and Laos very soon.
The planned investment by Mitr Phol follows the opening of a mill in Cambodia by its SET-listed competitor Khon Kaen Sugar Industry (KSL) last month, which came at an opportune time as sugar prices are at a 28-year high.
sugar mills - a
sugar factory (turns raw sugar into a good that can be sold in
stores)
Mitr Phol Group - a large and important Thai company operating in the sugar industry for more than 50 years, Thailand's leading sugar processor (See website)
Khon Kaen Sugar Industry (KSL) - one of Thailand's largest sugar companies founded in 1945 and the only sugar company listed on the Stock Exchange of Thailand (See Wikipedia)
challenging - difficult, in a way that tests your ability or determination ที่ท้าทายความสามารถ
SET-listed - the stock of the company is traded on SET (Stock Exchange of Thailand)
competitor - a person, team or company that is competing against others ผู้แข่งขัน, คู่แข่ง
opportune time - the best time to do something
Mitr Phol Group - a large and important Thai company operating in the sugar industry for more than 50 years, Thailand's leading sugar processor (See website)
Khon Kaen Sugar Industry (KSL) - one of Thailand's largest sugar companies founded in 1945 and the only sugar company listed on the Stock Exchange of Thailand (See Wikipedia)
challenging - difficult, in a way that tests your ability or determination ที่ท้าทายความสามารถ
SET-listed - the stock of the company is traded on SET (Stock Exchange of Thailand)
competitor - a person, team or company that is competing against others ผู้แข่งขัน, คู่แข่ง
opportune time - the best time to do something
Mitr Phol said that by investing in Laos and Cambodia, it will benefit from the tariff privileges the two countries gain from export markets such as the European Union. The EU offers low tariffs under its generalised System of Preferences (GSP) to help less-developed countries expand trade and lift the living standards of their people.
benefit
- to get help or an advantage from something ผลประโยชน์
tariff - a tax on goods entering a country (imported)
tariff privileges - reduced tariffs (that poorer countries like Laos and Cambodia get for exports to the EU)
Generalised System of Preferences (GSP) - a US law that gives lower tariffs to developing countries (See Wikipedia)
standards - levels of acceptable quality or achievement
living standards - levels of quality of life
tariff - a tax on goods entering a country (imported)
tariff privileges - reduced tariffs (that poorer countries like Laos and Cambodia get for exports to the EU)
Generalised System of Preferences (GSP) - a US law that gives lower tariffs to developing countries (See Wikipedia)
standards - levels of acceptable quality or achievement
living standards - levels of quality of life
The two neighbouring countries are among 19 developing nations entitled to duty-free sugar exports to the European Union under the Everything but Arms (EBA) programme.
KSL's hopes that its first shipment of brown sugar to the European markets would be made in May this year.
KSL's plant has a full cane-extracting capacity of 700,000 tonnes per year. Its maximum raw-sugar production amounts to 70,000 tonnes annually, of which 40% are expected to be processed into refined sugar in the future.
Everything but Arms (EBA)
programme - "an initiative of the European Union under
which all imports to the EU from the Least Developed Countries are duty
free and quota free, with the exception of armaments" (See Wikipedia)
entitled - having the right to have or do something มีสิทธิโดยชอบ
duty - tax on goods imported into a country (same as "tariff")
duty-free exports - goods coming from another country that do not have to pay taxes when entering the country
plant - a factory that produces power or processes chemicals, etc. โรงงาน
capacity - the amount of something that can be produced ความสามารถในการ (ผลิต)
cane-extracting capacity - the amount of sugar that can be taken out of sugar cane to make sugar granules
granules - the very small pieces of sugar (like sand)
maximum - the most possible ที่สูงสุด ที่มากที่สุด
annually - happening every year ทุกๆปีด
processed - treated in some way, e.g., treated with chemicals, cut, etc.
refined sugar - sugar that has been processed in a factory, packaged and ready to sell in a store or market
entitled - having the right to have or do something มีสิทธิโดยชอบ
duty - tax on goods imported into a country (same as "tariff")
duty-free exports - goods coming from another country that do not have to pay taxes when entering the country
plant - a factory that produces power or processes chemicals, etc. โรงงาน
capacity - the amount of something that can be produced ความสามารถในการ (ผลิต)
cane-extracting capacity - the amount of sugar that can be taken out of sugar cane to make sugar granules
granules - the very small pieces of sugar (like sand)
maximum - the most possible ที่สูงสุด ที่มากที่สุด
annually - happening every year ทุกๆปีด
processed - treated in some way, e.g., treated with chemicals, cut, etc.
refined sugar - sugar that has been processed in a factory, packaged and ready to sell in a store or market
On the other hand, Mitr Phol sees these investments as providing a greater competitiveness to its operations.
As a result, the company's competitiveness in neighbouring countries will be higher," said Mitr Phol Group chairman Isara Vongkusolkit.
In Laos, the company has established Sugar Mitr Laos in Savannakhet, which started commercial operations in 2008. Its total sugar output should be around 23,000 tonnes this year. About 95% of the output will be exported to the EU and the rest consumed. locally.
competitiveness - the
ability to offer for sale cheaper and higher quality goods than other
countries
established - be in a successful position over a long period of time มีตำแหน่งที่มั่นคง
commercial operations - running a business, doing a business
consumed - used, eaten
established - be in a successful position over a long period of time มีตำแหน่งที่มั่นคง
commercial operations - running a business, doing a business
consumed - used, eaten
We plan to extend the growing area in Laos from 50,000 rai at present to between 70,000 and 80,000 rai in 2011," Mr Isara added.
However, Mitr Phol has been unable to expand in Cambodia because of a labour shortage, something KSL has also identified as a problem at its new Cambodian mill. Mitr Phol will, however, focus on Cambodia within the next two years once the plant in Laos is running at full capacity.
extend
- to include something more ยืดออกไป ขยายออกไป
identified - named ระบุชื่อ
running at full capacity - the factory is producing the greatest amount possible (all machines being used, all the time)
identified - named ระบุชื่อ
running at full capacity - the factory is producing the greatest amount possible (all machines being used, all the time)
Mitr Phol has a 90-year concession for planting sugarcane by the Cambodian government, covering 100,000 rai. It is likely to invest 1-2 billion baht in the first phase.
Mr Isara said, however, that because the company's first investments were in Laos, it wanted to strengthen those operations first.
Mitr Phol also operates seven sugar mills in China with total capacity of 1.1 million tonnes per year.
concession
- a right that is given to a person or group to do a particular
activity, in this case, to operate a market สัมปทาน
first phase - the first part of a program that has many parts
first phase - the first part of a program that has many parts
Chamroon Chinthammit, the president and CEO of KSL, said sugar prices were expected to rise above 30 US cents a pound soon and remain high until 2011. Prices are being supported by high demand and short supply, as well as speculation by hedge funds to some degree, he said.
KSL this year inaugurated two new companies, Koh Kong Sugar Industry and Koh Kong Plantation in Cambodia with other Cambodian and Taiwanese partners, representing investments worth $100 million. The company holds a 90-year farming concession for 20,000 hectares in Koh Kong with an estimated 240,000 tonnes of sugarcane to be harvested in the 2009-10 season. All of the raw sugar will be sold to the EU.
Mr Chamroon also said the company was thinking about producing white sugar with a capacity of 300 tonnes a day with a total investment value around 300-500 million baht within the next two to three years.
prices supported by high demand
and short supply - many people want the good (high
demand) and there is little of the good available (short supply) then
price are high ("prices supported" at high level)
speculation - buying assets (stocks, bonds, real estate) hoping to make a profit when you sell (but with risk of losing money)
hedge fund - a private fund that only accepts very large investors that tries to make big profits by using sometimes very risky strategies and investments (See Wikipedia)
to some degree - this is one thing that is causing it (contributing to it)
speculation - buying assets (stocks, bonds, real estate) hoping to make a profit when you sell (but with risk of losing money)
hedge fund - a private fund that only accepts very large investors that tries to make big profits by using sometimes very risky strategies and investments (See Wikipedia)
to some degree - this is one thing that is causing it (contributing to it)
(Source: Sweet success ahead, 8/02/2010, Kamamol Pongthanee, link)
