Sugar industry: local production protection will not help

As the domestic sugar price has increased, the Ministries of Industry and Trade (MOIT) and Agriculture and Rural Development (MARD) have proposed the Government to grant quotas to import 150,000 tons of sugar. However, the Vietnam Sugar and Sugar Cane association (VSSC) does not think that it is necessary to import sugar at this moment.

If the Government agrees to grant quotas, Vietnam will have granted the quotas to import 350,000 tons of sugar in total so far this year

VSSC has voiced its disagreement to the proposal on granting quotas to import sugar right after the proposal was made. Ha Huu Phai, VSSC’s Secretary General stressed that it is not necessary to import sugar at this moment, because Vietnam still has a big inventory volume of sugar. By July 15, the inventory volume had reached 174,000 tons. Aside from the volume of sugar kept at sugar refineries, Vietnam still has the sugar now in circulation on the market. Meanwhile, enterprises still have not imported enough of the sugar they were allowed to import in the previous time (earlier this year, the Government granted the quota to import 200,000 tons of sugar).

“We cannot say that we are lacking sugar and we need more quotas to import sugar at this moment,” he said. “We will need 100,000 tons of sugar at maximum only for the production season for the mid-autumn festival.”

Meanwhile, commenting about the statement by the sugar association, analysts say the association only tries to protect the benefits of sugar refineries, while it does not take care for the benefits of consumers.

Under the WTO commitments, from 2007, Vietnam officially granted the quota to import 55,000 tons of raw and refined sugar, and the figure will increase by 5 percent per annum. The sugar which is imported as per quotas will be imposed the tax rates of 25 percent and 60 percent, respectively, for raw and refined sugar. Meanwhile, non-quota imports will be imposed very high tariffs of 80-100 percent.

Under the CEPT/AFTA (Common Effective Preferential Tariff Scheme for ASEAN Free trade area) commitments, from 2010, the sugar import tariff on all kinds of sugar has been lowered to 5 percent.

As such, though Vietnam has opened its market, the domestic sugar production still has been protected by tariff barriers and quotas. Several years ago, the import volume was small, therefore, the imports could not have impacts on the domestic prices, and the sugar association did not make critical response every time when quota to import sugar was granted.

However, in the last few years, the import volume tends to increase, since the demand has been increasing. As the domestic production cannot meet the demand, Vietnam has to increase the import volume.

According to MOIT and MARD, in 2005-2010, the consumption volume has increased by one million tonnes to 1.5 million tonnes per annum. Meanwhile, over the last five years, domestic enterprises still can put out one million tonnes of sugar only.

According to Saigon tiep thi, domestic sugar refineries still cannot take full advantage of the measures to protect local production to increase their capability and meet the domestic demand. Meanwhile, every time ministries propose to grant quotas to import sugar, sugar producers voice their disagreement.

According to VSSC, the production capability of 10 refineries in the Mekong Delta is 300,000 tons per annum, which can meet just half of the demand of the region. As the result, it is estimated that 100 tons of sugar smuggled every day to the border provinces of Vietnam.

Therefore, it seems that it is ineffective to protect the local production with tariff and quotas. In the last three years, Vietnam imported 150,000-300,000 tons of sugar each year, while the same volume of sugar has been illegally imported to Vietnam. – Saigon tiep thi

Tags: Vietnam sugar, Vietnam sugar industry