Pico Agriviet Company

Pico Agriviet

Vietnam recently imposed a 47.64% anti-circumvention tax on Thai sugar entering the country from five ASEAN countries. This step came after the ministry confirmed that Thai-origin sugar was evading import tariffs and entering the domestic market through re-exports. Under this new rule, Thai origin sugar imports from 5 particular ASEAn countries – Indonesia, Malaysia, Cambodia, Laos, and Myanmar will either be subject to several duties or the traders will have to prove that their products are made from locally harvested sugarcane. The tax will remain valid from August 9th, 2022 to June 15th, 2026. The main reason behind these measures is to support Vietnam’s local sugar producers, who are not able to compete with the imported sugar in terms of price and quality.

Vietnam produced around 850 thousand mt of centrifugal sugar in 2021, which was sufficient to meet 40% of the domestic demand. To meet the remaining needs, the country has been dependent on importing sugar from its neighbouring countries. Over the last few years, the area under sugarcane production has fallen as domestic sugar producers have failed to compete with imported sugar. The problem intensified after Vietnam signed the ASEAN Trade in Goods Agreement (ATIGA) in April 2019, which removed a number of tariffs and technical barriers . According to the Ministry of Industry and Trade, approximately 3,300 Vietnamese farmers have lost their jobs since then, and 93,225 farming households have been impacted as a result of the difficulties they faced in the domestic sugar industry.

Source: Ministry of Industry and Trade.

The recent announcement made by Vietnam’s Ministry of Industry and Trade on August 1, 2022 declared that it will impose a 47.64% anti-circumvention tax on Thai sugar entering the country via five ASEAN countries, namely Indonesia, Malaysia, Cambodia, Laos, and Myanmar. The ministry recently confirmed that Thai-origin sugar was evading import tariffs and entering the domestic market through re-exports via these five ASEAN, or Association of Southeast Asian Nations, member countries. As a result of the recently imposed duties, sugar imported from Cambodia, Indonesia, Laos, Malaysia, and Myanmar using Thai sugar materials will be subject to the same anti-dumping and anti-subsidy tariffs that are applied to Thai sugar.

Thai origin sugar from these five countries will be subjected to a total tariff of 47.64%, which comprises an anti-dumping tax of 42.99% and an anti-subsidy tax of 4.65%. For now, the tax will be applied from August 9th, 2022, to June 15th, 2026. However, the taxes will not be applicable if the traders from the countries can prove that their products are made from locally harvested sugarcane. A certificate stating that the product is made entirely of sugarcane harvested in the country of origin will allow it to be exported to Vietnam at the 5% tax rate. Similar measures were imposed last year on sugar imports from Thailand, effective for five years, but the local firms managed to get around the measures, with some Thai sugar products being imported through these ASEAN countries.

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