ATIGA could create fierce competition for sugar industry

The implementation of tariff reduction to zero percent under the ASEAN Trade in Goods Agreement (ATIGA) from January 1, 2020 will put great pressure on the Vietnamese sugar industry. However, experts say that since the policy of international economic integration is appropriate and inevitable, the sugar industry needs to stand on its own feet.

As the ATIGA takes effect, the Vietnamese sugar industry will face fierce competition due to a flood of imported goods entering the domestic market.

Dang Viet Anh, chairman of the Son La Sugar Joint Stock Company, said Vietnam’s sugar prices are higher than those of Thailand because the Thai government has subsidized at least US$1.5 billion a year for its sugar industry, equivalent to VND3,000 per kg of sugar produced in the entire country.

Vo Tri Thanh, former deputy director of the Central Institute for Economic Management (CIEM), said that given international economic integration, the biggest question is how to resolve the problems of sugarcane growers. If the problems cannot be resolved, the country needs to make adjustments, Thanh said.

The rice sector is also worried about Thai competition, but is hopeful of overcoming obstacles. For the sugar industry, however, restructuring is necessary to improve competitiveness and market integration, especially by restructuring material production.

Luong Hoang Thai, director general of the Multilateral Trade Policy Department under the Ministry of Industry and Trade, said sugar is the last item on which tariff quotas are being applied. By January 1, 2020, if ATIGA commitments are unmet, the possibility of trade sanctions would be very high.

According to Dang Viet Anh, to ensure productivity and income for sugarcane growers, the company has invested in seeds and fertilizers, and provided technical assistance. Local sugar production is not inferior to any regional markets. Thailand, for instance, has its productivity of 72-75 tonnes a hectare, not very much higher than that of 70 tonnes a hectare produced in Vietnam.