VietNamNet Bridge - The Vietnamese-owned Hoang Anh Gia Lai Group has received approval from the government to import 50,000 tons of sugar made in Laos, creating concern among domestic sugar companies.

Deputy Prime Minister Nguyen Xuan Phuc has instructed the Ministry of Industry and Trade (MOIT) to add 50,000 tons of sugar from Hoang Anh Gia Lai Group in Laos to the 2015’s sugar import quota. The imports will be taxed 2.5 percent.

The decision was released after a long debate between policy makers and domestic sugar companies about whether to allow imported sugar from Laos when the domestic output can satisfy domestic demand.

Hoang Anh Gia Lai Group asked for a preferential tax rate of zero percent for imports from Laos.

The proposal then faced strong opposition from the members of the Vietnam Sugar Cane and Sugar Association.

The association has even raised doubts about the capability of Hoang Anh Gia Lai.

“If Hoang Anh Gia Lai can make sugar at competitive prices, why doesn’t it think of selling sugar to other countries? Why does it insist on importing sugar to Vietnam?” an officer of the association said.

An analyst noted that the government’s decision showed it made a compromise for both sides. 

The decision showed that the government did not try to “push domestic sugar companies against the wall” by allowing imports of cheap sugar, but it tried to force domestic manufacturers to reduce production costs to be more competitive.

MOIT many times has pointed out the weak points of the domestic sugar industry, while urging sugar companies to reduce production cost and improve quality.

The ministry said that sugar companies have been heavily depending on the government’s measures to protect local production. As a result, Vietnamese consumers have to pay dearly for domestic sugar products.

Prime Minister Nguyen Tan Dung, chairing an inter-ministerial meeting in the first quarter, emphasized that it is necessary to remove the barriers to protect domestic production. 

He said sugar companies need to restructure and apply advanced technologies to be able to exist on their own two feet.

An official of MOIT also noted that Vietnamese have to buy sugar at high prices, though there are hundreds of sugar refineries in Vietnam.

Le Van Tam, chair of the Vietnam Sugar Cane and Sugar Association, denied that domestic companies want to maintain quotas to protect domestic production.

Under current regulations, sugar import and export quotas must be determined by MOIT. Tam said the “ask and grant” mechanism only benefits a group of businesses, and does not help develop the domestic sugar industry.

DV