Sugar Smuggling to Vietnam from Cambodia and Laos, Rampant and Rising

Sugar smuggling is rampant in Vietnam due to the removal of tariffs and regulations, which benefited sugar smugglers.
Freshly harvested sugarcane ready for sugar extraction.

Sugar smuggling in Vietnam is getting rampant and continues to rise. Sugar is illegally imported from Cambodia and Laos.

Vietnam Engages in Sugar Smuggling

From 2015 to 2019, 757,000 metric tons of sugar illegally enter Vietnam. It’s almost 2.8 times the quantity from 2008 to 2014 when no sugar smuggling takes place yet. Overall, some 557,000 metric tons originated from Cambodia and 200,000 metric tons more from Laos.

A forum on conservation development of the country’s sugar industry released the said figures. The Vietnam Sugar and Sugar Cane Association (VSSA) and U.S.-based Forest Trends co-organized the conference. It preserves significant ecosystems by environmental financing, supply chains, marketing, and other grant means.

Thailand, Source of Smuggled Sugar

Thailand is the main source of smuggled sugar. The said Asian country provides price stipends to its sugar importers. Cambodia and Laos smuggle Thai sugar to Vietnam at a lower price compared to the domestically produced Vietnamese sugar. This encouraged sugar smuggling into Vietnam from its two adjacent countries.

In November 2017, Thailand abolished the protocols on domestic sugar retail prices. The quashing of the regulation gave sugar smugglers the “go” signal. Even in the past, sugar smuggling in Vietnam rose to nine times. In 2008, it soared from 100,000 metric tons to 890,661 metric tons in 2018.

On the other hand, Vietnam’s allegiance to the ASEAN Trade in Goods Agreement (ATIGA) in January 2020 cleared import quotas. Moreover, it reduced import tax rates to 5% from the original 80% to 85%. During that time, Vietnam imported sugar through official trade channels.

Because of the lower import tax rate, businesses have no difficulty importing sugar through official channels. Likewise, it helped minimize sugar smuggling into Vietnam from Laos and Cambodia.

The sugar smuggled into Vietnam from Cambodia and Laos in 2020 was roughly 206,000 metric tons. It’s equivalent to almost 25% of the total amount of sugar smuggled in 2019.

When sugar enters Vietnam, it gets mixed with domestic sugar. Sometimes, sugar smugglers change the packaging to make it look like its produced locally. Additionally, they dispatch Vietnamese packaging to Cambodia. They will use these to pre-pack Thai sugar delivering it to Vietnam through land boarders.

Vietnam ranks fourth when it comes to sugar industry in Asia following Thailand, Indonesia, and the Philippines. It ranks 15th in worldwide’s total cultivation hectares.

Failure to Equal on Own Realm

From 2016 to 2021, Vietnam lost more than 120,000 hectares of sugar cane equivalent to a 45% decrease. Likewise, production nose-dived from 64.8 to 61.5 tons per hectare on the same period, noted the VSSA.

From 219,500 households that cultivate sugar cane, it declined to 126,000. In fact, 11 sugar factories already shut down and sent output to only 0.77 million tons from 1.24 million tons. It’s a huge difference of 38% decrease.

The country’s sugar production only provides about 40% of market demand, while the remaining percentage came from imports.  Local sugar producers can’t compete with imported sugar, mostly from Thailand.

“While Việt Nam can consider imposing anti-dumping and anti-subsidy taxes on sugar from Thailand it may encourage smuggling, a thorn of the side of the country’s sugar industry for years now,” said President of VSSA Cao Anh Đương.

The country’s sugar industry suffered because of the mistreatment the sugar farmers receive. Moreover, the number of sugar smugglers increased because of the removed number of tariff and technical barriers.


Image Source: The Erica Chang/WikimediaCommons (Creative Commons Attribution 3.0 Unported)