Vietnam’s waiver of sugar import quotas could sweeten Laos’ market share

Vietnam’s waiver of sugar import quotas could sweeten Laos’ market share
Published 3 January 2020

 

VIENTIANE (Vientiane Times/ANN) - Vietnam’s abolition of sugar import quotas for Asean members is seen as a major opportunity for Lao businesses to more easily access the neighbouring country’s market. 

It provides the potential for Lao businesses to gain a foothold in a large market with many consumers, according to a sugar processor in Savannakhet province.

Vietnam’s removal of sugar quotas on imports from Asean nations means member states will be able to export sugar to Vietnam without restrictions. This is good news for Asean states that produce sugar and can access Vietnamese markets, according to information published on the website of the Ministry of Industry and Commerce.

Sugar is a commodity whose import the Vietnamese government has to regulate in order to protect domestic producers. 

Past restrictions posed difficulties for sugar producers in other Asean countries wanting to tap into the Vietnamese market.

But in compliance with the obligations of Asean, the Vietnamese government signed Agreement No. 130/NQ-CP on October 17, 2018.

Vietnam’s Ministry of Industry and Commerce then issued Decree No. 23/2019/TT.BCT to abolish sugar import quotas, which will come into force on January 1, 2020. The decree is applicable to all Asean members.

Quotas for sugar imports originating from Asean members will be terminated and there will be no limits on the quantity of sugar imported to Vietnam.

However, import duties on sugar will remain, such as the duty applied to Laos, which is 2.5 percent when using Form S and 5 percent when using Form D. 

In 2018, Laos’ target for sugar exports was US$92.4 million, but total earnings amounted to only US$63.5 million, according to the Ministry of Industry and Commerce.

In 2019, Laos set the target at US$85.5 million, a significant increase over the value of sugar actually exported in 2018 but lower than the target set for that year.

The main reason for the drop in value was the fall in the price of sugar on global markets, according to a sugar processor in Savannakhet province.

The market price of sugar fell from US$500 a tonne in 2017 to US$300 a tonne in 2018. 

In 2016, Laos earned more than US$15.4 million from the sale of sugar to Thailand, which increased to US$18.8 million in 2018, the Ministry of Industry and Commerce said. 

Laos also sold sugar worth US$31.5 million to Vietnam in 2016, with the value increasing to almost US$50 million in 2018.

Laos exported more than 55,000 tonnes of sugar to China in 2018, and was projected to sell another 100,000 tonnes to the Chinese market in 2019.