Thai sugar maker pulls out of the Cambodian market competition

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Thailand's third largest sugar supplier, Khon Kaen Sugar Industry Plc (KSL), has pulled out from its business in Cambodia due to unfavorable conditions. This is a significant blow to its expansion plans in the region. KSL President Chalush Chinthammit stated that continuous low global sugar prices, a weak Cambodian market, and low use of the Generalised System of Preferences (GSP) trade scheme led to this decision.

 

He remarked that Cambodia doesn't fully use the GSP scheme to export sugar to Europe and the US. GSP, a scheme provided by the US and EU, is designed to help weaker economies by granting them special trade benefits like lower tariff rates or exemptions from duty. The insufficient use of this scheme by Cambodia has heavily influenced KSL's strategies.

 

Even though global sugar prices have shown an improvement this year due to droughts creating a decrease in supply, the extended period of low prices and rising costs of sugar cane farms have negatively affected KSL. Chalush said that the company couldn't cope with these unfavorable conditions anymore.

 

KSL first set foot in the Cambodian sugar market in 2006, collaborating with Cambodian and Taiwanese firms to form two new companies targeting sugar production and sugar cane plantation. The Cambodian government granted KSL and its associates a 90-year concession on 125,000 rai of land.

 

However, Chalush emphasized that the return on investment in Cambodia is not as advantageous as in Thailand and Laos. He explained that expanding the sugar business in Cambodia provides many challenges.

 

 

In stark comparison, KSL continues to prosper in Laos. The Laotian government gave the company 60,000 rai for planting sugar cane and operating a sugar mill, leading to earnings of over 200 million baht a year in Laos.

 

Considering the growing worry over global warming, KSL is looking into new business opportunities related to the reduction of carbon dioxide emissions. It's partnering with energy giant Bangchak Corporation to invest in biofuel projects, involving the creation of sustainable aviation fuel (SAF).

 

SAF, which emits up to 80% fewer greenhouse gases compared to regular jet fuel, can be manufactured from items like used cooking oil, crop waste, or ethanol.

 

While KSL is shifting from its operations in Cambodia, it stays dedicated to its endeavors in Laos and its new sustainability initiatives. This change in strategy shows the company's adaptability and commitment to adjusting to both market conditions and environmental issues.

 

File photo for reference only

 

-- 2024-07-05

 

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