The delay of the implementation of ATIGA (ASEAN Trade in Goods Agreement) for two years will bring more opportunities to Vietnam’s sugar industry, giving Vietnamese enterprises time to improve competitiveness.
There are 110,000 sugarcane growers and 380,000 workers in the sugar industry, which has been struggling to survive amid increased supply and smuggling.
About 500,000 tons of smuggled sugar cross the border gates each year to Vietnam. The smuggled products are available in all provinces and cities.
Many analysts have voiced their concern about the future of the industry, saying that Vietnamese products cannot compete with Thai goods as Vietnamese manufacturers are slow in renovating technology while their productivity is still low.
The analysts blame the weakness of the sugar industry on the government’s policy, which protects domestic production.
The deputy chair of the Vietnam Sugar and Sugarcane Association (VSSA), Pham Hong Duong, said that it is unfair to blame domestic production protection. He said Thailand also protects local production, but its sugar industry continues to develop well.
Vietnam has drawn up a plan to develop the sugar industry by 2020, under which unprofitable sugar mills will be dissolved, while Vietnam will accelerate the production of post-sugar products, such as ethanol and electricity.
Vietnam’s processing industry has been thriving thanks to increased income per capita.
The world sugar price has bottomed out and may recover as the global supply in the next crop is predicted to decrease by 2 percent, or 5.4 million tons. The output from Brazil, the biggest sugar producer, is forecast to decrease by 12 percent.
All these factors, according to analysts, will help improve competitiveness of Vietnam’s sugar industry in the next fiscal year.
Other regional countries, including Thailand, Malaysia and the Philippines, also want to postpone the implementation of ATIGA’s provisions related to sugar. Vietnam’s action is within the general trend.
However, analysts said in order to develop in a sustainable way, Vietnam has no other choice but to restructure sugarcane farming, harvesting, processing and consumption.
Under the sugar industry development program, Vietnam will maintain stable sugarcane production on an area of 300,000 hectares and no new sugar mills will be built. Only the mills in the material areas will be expanded.
As of the end of May, sugar inventories had surged to 670,000 tons, according to VSSA, and the local sugar industry once again cries for more support.