Talking about the difficulties in the sugar industry, Mr. Tran Ngoc Hieu, General Director of Soc Trang Sugar Corporation revealed that the company can only sell 10% of the total output while the inventory accounts for 90%.
Because manufactured products are not being sold out, the raw material areas for sugarcane production in Soc Trang have been decreasing dramatically. Specifically, in 2017, it was 8,400ha, while in 2020, the total area is only about 2,400ha. It is expected to decrease to below 2,000ha in 2021. The sugarcane production area has decreased by 72% compared to 2017-2018.
According to Mr. Hieu, the reason for the continuous decrease in sugar production is the impact of smuggled goods and trade fraud. Thai sugar has been imported into Vietnam at low prices, and is unfairly competing with domestic sugar.
After many years of maintaining a protection policy for the sugar industry, Vietnam began to implement its commitments under the ASEAN Trade in Goods Agreement (ATIGA) to the sugar industry from January 1, 2020 by not limiting the amount of sugar imported from ASEAN countries, and reducing the import tax to only 5%.
According to the General Department of Vietnam Customs, in the first 10 months of 2020, the amount of sugar imported into Vietnam increased rapidly. In particular, 884,285 tons of sugar were imported into the Vietnamese market, which is even greater than the amount of domestically produced sugar.
Specifically, the amount of cane sugar imported directly from Thailand to Vietnam accounts for the largest proportion (87.67%). The amount of sugar imported from Malaysia, Cambodia, Indonesia, and Myanmar also increased sharply.
According to the Vietnam Sugarcane and Sugar Association, Vietnam's sugar industry has been severely damaged by trade frauds and smuggled sugar.
The association also said that although other countries in ASEAN including Thailand, the Philippines and Indonesia implemented ATIGA commitments between 2010 and 2015, they still apply measures to protect their sugar industry.
Governments of these countries still play a decisive role in subsidizing prices, closely protecting the domestic market and preventing cheap imported sugar from being freely consumed in the domestic market.
At the seminar "Solutions for Vietnam's sugar industry", Mr. Pham Tien Nam, Vice President of the Central Vietnam Farmers Association, affirmed that it is very urgent to find solution for the sugar industry, especially when businesses and farmers are under great pressure from free trade agreements and the impacts of the Covid-19 pandemic.
According to Mr. Nam, there are two main solutions. The first is improving productivity, production quality and innovation in production technology.
This solution depends mainly on businesses. They need to accept ATIGA as an opportunity to integrate and compete fairly in the international market. Enterprises need to renew themselves, improve productivity and quality in order to compete equally and survive in a new situation.
The second is related to policies and support of the Government. Currently, the Government and related agencies have issued many supporting policies for the sugar industry such as Decree 89, Decision 68, Decision 1.369, Decision 4.612 and most recently, Directive 28 of the Prime Minister on the implementing solutions for Vietnam's sugar industry in the new situation.
However, the moves to save the sugar industry are considered lagging and lacking in specificity to be put into practice. Ministries and management agencies need to do more to support farmers and businesses to develop Vietnam’s sugar industry.
According to Mr. Nguyen Van Loc, acting General Secretary of Vietnam Sugarcane Association, the Association currently has sufficient database to determine that imported sugar originating from Thailand is devalued and subsidized to dumping in foreign markets (according to the WTO trade rules). The Vietnam Sugarcane and Sugar Association also has clear evidence that the dumping of imported sugar has caused significant damage to the domestic industry.
Therefore, to save the domestic sugar industry and the livelihoods of sugarcane farmers, Mr. Loc said that Vietnam can completely decide to apply trade remedies in accordance with international law and WTO trade rules for the sugar industry. This is a legitimate job to protect sugarcane farmers and increase budget revenues.
From a different perspective, Mr. Le Dang Doanh said that it is time for the sugar industry to restructure, improve productivity, and invest effectively in reducing costs in order to compete fairly with imported goods.
Currently, many sugar manufacturers are suffering losses due to low productivity. If Vietnamese sugar companies do not improve their cultivation methods to improve productivity and quality of sugarcane in order to lower costs, they will surely find it difficult to survive.