has to cut sugar tariffs as part of the AFTA agreement. This opens great
opportunities for nearby exporting countries like Thailand but is adding huge
pressure on the already suffering domestic sugar industry.
the end of August 2017, the Vietnamese government announced it would
eliminate quotas and tariffs for sugar imported from other ASEAN countries from
2018, according to the ASEAN Trade in Goods Agreement (ATIGA).
ATIGA is part of the efforts in the ASEAN Free Trade Area (AFTA) to remove
tariffs and aim to establish a single market for the Asian countries. It was
created in 2009 by the ASEAN members. According to the Agreement, the countries
Cambodia, Laos, Myanmar and Vietnam should eliminate about 90% of tariff lines
in 2015 and 97% in 2018. Furthermore, some sensitive agricultural commodities
such as raw sugar, white sugar, rice, chicken meat, pork and supplementary
food, canned meat, egg, some fruits…are allowed to remain tariff rate of 5%
a result, under AFTA, Vietnam will have to open its sugar market to the
other ASEAN countries. This means that imports from ASEAN will be taxed 5
percent instead of 80-100 percent like now.
Vietnams sugar market
Vietnam is conducting a sugar tariff-rate import quotas system, aiming to
protect its local sugar industry, which is facing a hard time at the moment.
The sugar import tariff for all other ASEAN countries is 5%. For other
countries outside the ASEAN region, the import tariff on in-quota raw sugar
is 25% and that on in-quota refined sugar is 40%, according to market
intelligence firm CCM. However, the import tariff on out-of-quota raw sugar and
refined sugar is 80% and 85% respectively.
a result of the cancellation of the system in 2018, a great amount of
sugar may be imported from Thailand and other ASEAN nations into Vietnam,
which is likely to put a lot more pressure on the already suffering domestic
present, Thailand is the largest sugar producer among all ASEAN countries,
annually producing 11 million tonnes of sugar. By 2020, its sugar production
will be likely to reach 20 million tonnes. The other ASEAN nations are
Indonesia, Vietnam, Malaysia, Philippines, Singapore, Myanmar, Cambodia, Laos,
and Brunei. Those countries are having a share of about 10% in the global sugar
at the global major players, Brazil is leading the list, followed by India and
China, with Thailand inheriting the fourth rank is global sugar production, but
second in export volume. After three years of declining sugar production
worldwide, the output has finally witnessed a growth in the sugar extracting
season of 2016/17 again.
is worth noticing regarding the more beneficial import conditions for sugar in
Vietnam, that under the commitment made with the World Trade Organisation,
Vietnam has to import a fixed quota of sugar from other countries every year.
The quota even increases 5% points annually.
Hard time for
Vietnam Sugarcane and Sugar Association stated, that the output of sugar in the
extracting season 2015-2016 went down by 13%. However, it is notable that the
downtrend still met the demand in the country, since imports have covered up
the gap. According to Vietnam Sugar and Sugarcane Association, sugarcane
cultivation decreased to 219 hectares during the 2016-2017 season, the lowest
the other hand, sugar prices in Vietnam have increased strongly against those
in early April and are currently at the highest levels so far.
country is also witnessing a huge amount of sugar stockpiles recently, namely
700,000 tonnes in 2017. The main reason can be found in the huge amount of sugar
that is smuggled from Thailand, the second largest sugar exporter in the world,
biggest consumer of sugar produced in Vietnam is China. However, the country is
also changing their attention in recent years from Vietnam to Thailand. Thai
sugar price is comparatively lower than the Vietnamese counterpart, which is
threatening the domestic manufacturers. In Vietnam, the sugarcane material
price is USD45-50 per ton, while it is USD30 per ton in Thailand. Vietnam’s
sugar is less competitive than other countries if noting that sugarcane
accounts for 75-80 percent of the sugar production cost.
2018, when several tariff quotas will be lifted in accordance with the trade
agreements, industry experts suggested improving technology to increase
productivity and lowering sugar prices to compete with imported products.
Thailand is dominating
Vietnam is competing with Thailand about the sugar market, industry insiders
see the problem in the price and quality of Vietnamese sugarcane, rather than
in the production technology. The cheaper price of Thai sugarcane is due to the
subsidies the farmers get in order to develop high-quality sugarcane in their
late Jan. 2017, the Thailand Cane Sugar Industry Association announced that the
sugar output in 2016/17 would decrease by 3.1% year on year to 9.30-9.40
million tonnes since some farmers changed to grow other crops due to the
is the 2nd largest sugar exporting country in the world. Impacted by El Niño phenomena,
it suffered a drought last year which is the most severe in the past 20 years.
Its sugar export this year will also fall to around 6.80 million tonnes, vs.
7.10 million tonnes in 2015/16.
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