Vietnam pays a heavy price for sugar production protection
Vietnam pays a heavy price for sugar production protection
Vietnamese consumers have to pay VND4 trillion more every year for the gap between the domestic and the international sugar prices.
The Vietnam Sugar and Sugar Cane Association (VSSA) has violently protested against the Hoang Anh Gia Lai’s plan to sell 30,000 tons of sugar it made in Laos to Bien Hoa Sugar Company, which plans to refine the products for export to China.
The reason behind the strong opposition is that the imports would harm the local production, especially in the current context of the high inventories.
VSSA admitted that if the Ministry of Industry and Trade (MOIT) allows Hoang Anh Gia Lai Group to bring the 30,000 tons to Vietnam, it would make a huge profit of VND80 billion because the sugar price is higher in Vietnam, where the sugar production is being protected by the State.
VSSA and its member companies also admitted that the high prices in Vietnam have encouraged the sugar smuggling across the border gates.
According to the association, the amount of Thai sugar smuggled into Vietnam has been increasing rapidly in the last few years, from 300,000 tons in 2011 to 500,000 tons in 2012. It is expected that the smuggled imports from Thailand would account for 1/3 of the total 1.6 million tons of sugar to be consumed in 2013.
The figures show that Vietnamese consume 1.6 million tons of refined sugar every year, which means that Vietnam needs 1.648 million tons of raw sugar. As such, the profit surplus sugar refineries can pocket is very huge, about VND4.32 trillion.
VND4.32 trillion is the profit sugar companies can make not from their efforts to compete with rivals and improve product quality, but from the gap between the domestic and the international prices brought by the protection policy.
VSSA, in the name of millions of sugar cane growers, has called on competent agencies not to allow Hoang Anh Gia Lai to bring 30,000 tons of sugar to Vietnam, stressing that the imports would harm millions of Vietnamese farmers.
The association said that the sugar production cost in Vietnam is higher than in other countries, because farmers can sell sugar cane at the prices higher by two or three times higher.
However, analysts have pointed out that VSSA tries to prevent the imports not for the sake of farmers, but for sugar companies. If sugar manufacturers want to protect farmers, they should spend money to help farmers increase the productivity and improve the competitiveness.
The analysts said that the current policies on protecting local production, while protecting some sugar companies and millions of farmers, makes tens of millions of consumers suffer. It is estimated that Vietnamese have to pay VND4 trillion more every year for the gap between the domestic and the world’s prices.
Thai sugar has been sold at the prices lower by VND2,000-3,000 per kilo than Vietnamese. Sweets manufacturers also prefer imports to domestic products.
The State itself has to pay a heavy price for the sugar production protection policy. The high domestic prices encourage the smuggling from neighboring countries. The State cannot collect tax from the smuggled products, while consumers have to pay for the sugar anti-smuggling.
vietnamnet
