Vietnam faces a boom of imported sugar from ASEAN countries except for Thailand

According to Mr. Nguyen Van Loc, Acting General Secretary of the Vietnam Sugar and Sugarcane Association (VSSA), the entire sugar industry has pressed nearly 6.3 million tons of sugarcane, producing 661,712 tons of sugar by the end of April 2021. It is estimated that sugar production of the 2020-21 crop will reach less than 700,000 tons. This is really a low production record.

Although domestic produced sugar output has decreased sharply, consumption is very difficult because of the fierce competition with foreign sugar in the domestic market. In April 2021, imported sugar, including those imported through official and smuggling channels, continued to dominate the market.

Especially, sugar imported from Thailand in the period before tax imposition and those originated from Thailand but imported into Vietnam in the form of importing from other ASEAN countries (Cambodia, Laos, Indonesia, Malaysia, Myanmar) to avoid anti-dumping and anti-subsidy taxes, are completely overwhelming over the Vietnamese market. Sugar factories are facing difficulties as consumption in the domestic market could not compete with foreign products even after they have raised the purchasing price of sugarcane for farmers. Domestic sugar with a new price level still cannot help to confront the imported products.

According to the General Department of Customs, in the first three months of 2021, there was an unusual phenomenon in sugar imports into Vietnam from a number of ASEAN countries besides Thailand. Accordingly, the amount of sugar imported from Cambodia, Laos, Malaysia, Myanmar and Indonesia has increased explosively when compared to the same period of 2020.

Specifically, the total amount of sugar imported from the five countries mentioned above in the first quarter was 188,202 tons, an increase of 5,735% over the same period in 2020. The amount of sugar imported from each country is as follows: Cambodia - 60,260 tons; Indonesia - 31,925 tons; Laos - 18,350 tons; Malaysia - 32,984 tons; Myanmar - 44,683 tons.

According to VSSA, such a growth of sugar imports from Cambodia, Laos, Malaysia, Myanmar, and Indonesia into Vietnam in the first quarter of this year is really unusual because all the five ASEAN countries mentioned above have absolutely no development in sugar cane production to be able to export sugar to Vietnam with such an explosive level.

Thailand, Indonesia, the Philippines, and Vietnam are the main four sugar-producing countries in the ASEAN. Thus, among the five countries with booming sugar exports to Vietnam in the first quarter of 2021, only Indonesia has listed the largest sugar producers in the region. However, Indonesia's sugar production is much lower than the consumption demand. For example, in 2019, it grossed an output of 2,227 million tons, while consumption amounted to 6.95 million tons.

Due to such a huge difference in output and demand, each year, Indonesia still has to import millions tons of sugar (ranked 2nd in Asia after China in terms of imported sugar), and up to 80% of the amount of sugar imported into Indonesia comes from Thailand.

Not only Indonesia but the remaining four countries also import sugar from Thailand because their domestic production is quite limited, and basically, sugar imported into Vietnam from these five ASEAN countries is related to their origination from Thailand. Therefore, VSSA believed that the amount of sugar imported from Cambodia, Laos, Malaysia, Myanmar, and Indonesia which increased dramatically in the first quarter of the year, is clearly a sign of the action to avoid anti-dumping tax (CBPG) and anti-subsidy (CTC) tax that Vietnam's Ministry of Industry and Trade has imposed on sugarcane and sugar products imported into Vietnam and originated from Thailand.

The current sugarcane pressing season 2020-21 is coming to the end. Sugar imported through official channels from Thailand and ASEAN countries continues to pour into the country along with an active operation of trade fraud is resulting in a large amount of imported sugar in the Vietnamese markets. Thus, imported sugar continues to completely dominate the market despite the logistics crisis occurred in official-imported channels and smuggled border control.