Lifting of sugar import tariff not such a sweet deal for domestic producers

Increased sugar imports

According to the Vietnam Sugarcane and Sugar Association (VSSA), almost all 28 sugar mills operating in the 2019-2020 crop season have stopped production. They produced 748,372 tonnes of all kinds of sugar as of April 15, and are expected to produce about 900,000 tonnes by the end of the sugarcane crop, a drop of 24 percent compared to the previous crop.

Nguyen Van Loc, acting secretary-general of the VSSA, said domestic sugar prices are still high, making it hard to compete with imported sugar. The price of domestic granulated sugar ranges from VND12,000-12,600 per kg, while refined sugar is sold at VND12,700-14,000 per kg. Imported sugar costs VND12,100-12,800 per kg.

Vietnam was scheduled to abolish its five percent import tariff on sugar in 2018 under the ASEAN Trade in Goods Agreement (ATIGA), but negotiated a delay to January 1 of this year under pressure from the VSSA.

Since the taxation was scrapped, sugar imports have increased sharply. According to the Vietnam Market Analysis and Forecast Joint Stock Company (AgroMonitor), Vietnam imported about 241,000 tonnes of sugar in the first quarter of the year, equivalent to around 30 percent of total domestic production.

High inventories

Vo Thanh Dang, chair and general director of the Quang Ngai Sugar Joint Stock Company (QNS), said the company has maintained high buying prices to ensure raw material and minimize damage to farmers. In addition, selling prices have fallen on a par with production costs, but inventories remain high, Dang said.

The prime minister has assigned ministries and agencies to consider and apply technical barriers to imported sugar in order to protect domestic production. However, implementation remains slow.

Dang said QNS is working with other sugar businesses to propose the application of trade remedies for imported sugar according to the provisions of Vietnamese law and in accordance with international practices.