The government trade remedies are expected to support sugar prices and improve the competitiveness of Vietnam's sugar industry, according to local insiders.

Vietnam sugar industry is expected to benefit from trade protection measures in 2021. Photo: Bao Cong thuong

The govenrment has recently slapped temporary anti-dumping duty of 33.88% and countervailing duty of 44.88% on sugar originating from Thailand.

The decision comes after the Ministry of Trade last September initiated an anti-dumping and countervailing investigation for imported sugar from Thailand on the basis of the documents requested by the Vietnam Sugar and Sugarcane Association (VSSA) and domestic sugar producers.

This tariff will be regularly reviewed to ensure a fair, competitive environment if there is a strong shift from importing refined and white sugar to importing raw sugar in order to avoid anti-dumping tax and anti-subsidy at a higher level.

According to local experts, domestic sugar producers may benefit from this policy.

A recent report from the Vietcombank Securities Joint Stock Company (VCBS) predicted that, the price of sugar imported from Thailand is estimated to be equal to or higher than the price of Vietnamese sugar, after paying anti-dumping duties, therefore, the amount of raw sugar imported from Thailand is expected to drop sharply.

According to the VCBS research team, price of the domestic sugar would surge, representing a motivation for farmers to develop sugar cane growing and expand cultivation material areas.

According to the FPT Securities (FPTS) estimates, imported sugar will be at a low level in the period from December 2020 to April 2021. Domestic white sugar prices in 2021 fluctuate between VND10,500 (US$0.45) and VND13,000 (US$0.56) per kg that are lower than the price of Thai white sugar sold in Vietnam which would stand at VND13,000 (US$0.56)-VND14,000 (US$0.6) per kg once the duties take effect. 

Sugar production in Thailand in the crop year 2020-21 is forecast to decrease by 5.4% (reaching 7.8 million tons - the lowest level in the past ten years) due to the impact of weather. 

This year, the FPTS experts believes that the profit margins of domestic sugar enterprises will continue to be high, and that growth in the whole sugar industry will be positive. Sugar prices are expected to rise thanks to the government's supportive policy for the industry. In addition, the favorable weather in 2021 helps improve sugarcane production in the 2021-22 crop.

However, the FPTS experts also warn some investment risks in the sugar industry, including illegally imported sugar, price fluctuations and weather risks.

For the imposition of duties, the Ministry of Industry and Trade will continue to work with stakeholders, verify data, hold a public consultation session, and assess the overall impacts of the case to related parties. The final decision is expected to be released in the second quarter of 2021.