The Ministry of Industry and Trade late last week required businesses to cease importing sugar for re-export via auxiliary border gates in the northern province of Lao Cai.— Photo vov

HA NOI (Biz Hub) — The Ministry of Industry and Trade late last week required businesses to cease importing sugar for re-export via auxiliary border gates in the northern province of Lao Cai.

This move was intended to block the illegal sale of this sugar in the domestic market.

Ha Huu Phai, head of the Viet Nam Sugar and Sugarcane Association in the northern region's branch told Dau tu (Viet Nam Investment Review) newspaper that this would help the domestic sugar and sugarcane industry to partly remove difficulties faced by high inventories.

According to the association, on August 4, the industry still had an inventory of 414,000 tonnes of sugar even though the Ministry of Industry and Trade allowed unrestricted sugar exports in small volumes via the neighbouring border gates.

Last year, the quantity of temporarily-imported sugar for re-export from Viet Nam was quite large. However, customs agencies found that thousands of tonnes were not re-exported as regulated after being imported, but instead consumed illegally in the domestic market.

It, together with the sugar smuggled in via South Western border gates, had caused the sugar price produced in the country to become VND3,000 to VND4,000 (15 cent - 19 cent)per kilo higher than that of illegal imported sugar.

According to the Viet Nam Sugar and Sugarcane Association, smuggled sugar, which was priced lower and amounted to hundreds of thousands of tonnes a year harmed local producers amid a huge volume of sugar stockpiles.

Besides the illegally imported sugar, however, experts were also concerned about the rising pressure on domestic sugar and sugarcane production industry when import tax on sugar would be cut to zero from the current 5 per cent by 2015 under the ASEAN Trade in Goods Agreement (ATIGA).

Moreover, the cheap sugar from outside the ASEAN bloc would also flood the country once the Trans-Pacific Partnership Agreement was signed, they said.

Currently, the price of sugar in Viet Nam is roughly US$50 per tonne, almost at par with the world's most expensive sugar. The prices in Brazil and Thailand, for example, are only US$12 and $25 per tonne.

This was because of low productivity of local sugar and sugarcane production. Viet Nam's sugar productivity is only 64 tonnes of sugarcane and 5.4 tonnes of sugar on a hectare while the figures in Thailand and Brazil are 100 and 120 tonnes of sugarcane, and 8 and 12 tonnes, respectively of sugar.

Experts have urged sugar and sugarcane enterprises to quickly undergo comprehensive technological restructuring and introduce a new sugarcane breed into production if they do not want to see the doors shut on them when cheap priced sugar enters the country.

Deputy Minister of Agriculture and Rural Development Vu Van Tam said that sugar processing companies must revamp their production in order to cut costs, which was vital for competition.

He added that the planning of cultivation areas should be revamped to ensure efficiency and productivity. — VNS