Rice export right market gets bustling

Mar 16th at 12:19

16-03-2013 12:19:52+07:00

Big enterprises can still earn money without doing anything, by selling the rights to export rice to the unlicensed enterprises. The rice export right market gets more bustling.

Doan Ngoc Tho, Director of the HCM City based THO, a trade and service company, said that since the day the Decree No. 109 took effects on January 1, 2011, the small businesses could not export rice to make money any more.
The decree, which according to the Ministry of Industry and Trade (MOIT), aims to tighten the control over the rice export activities, stipulates that only the enterprises which can satisfy the requirements on rice storehouses and husking factories, would be licensed to export rice.

THO is one of hundreds of enterprises which cannot export rice any more, because it is a trade company which does not have factories and storehouses.

Rice export right traded at $0.5-5 per ton

Previously, THO exported no less than 10,000 tons of rice a year. Having good English skills, experiences in rice export and good relations with foreign partners, and participating in many international trade fairs, Tho now cannot export rice any more, which makes Tho feel uneasy.

Therefore, Tho decided to contact the enterprises which have the licenses for exporting rice and asked them to export rice for THO, under their names. The enterprises, of course, would get benefits from the help given to THO.

THO’s idea has been applied by many other enterprises as well. The rice export right market has become more bustling because the trade benefits both the sellers and buyers.

The small enterprises, after signing rice export contracts with foreign partners, would ask licensed enterprises to export rice under their names. In return, the small enterprises would have to buy materials from the licensed enterprises and pay the fee of $0.5-5 dollar per ton.

Some experts said that the transactions of this kind have been explained as the mode of authorized export. However, by the nature, they say, this is a kind of trading rice export quotas, which once existed in the past.

Tho complained that his business has not been going well since the day the Decree No 109 took effects, even though it still has been exporting rice under others’ names.

In the past, when THO could export rice in normal conditions, it could decide when to buy materials and when to sign export contracts to optimize profits. It would buy materials at the time when the prices were low and then export rice when the prices went up. Meanwhile, nowadays, THO cannot take initiative in its works.

The Decree No. 109 which took effects on January 1, 2011, stipulates that rice exporters must have the storehouse with the minimum capacity of 5,000 tons and the rice processing factory with the capacity of 10 tons per hour.

In an effort to obtain licenses for exporting rice, enterprises made heavy investment to build storehouses and processing factories. It was estimated that 150 enterprises had been licensed to export rice by mid 2012.

The number was much higher than the number expected by the policy makers. Finally, Deputy Prime Minister Hoang Trung Hai instructed to cut down the number to no more than 100.