Retail prices of refined sugar has reached a record high level of VND13,500 (86 US cents) per kilo in Vietnam despite falling demand, according to the Market Management Department under the Ministry of Trade.
High sugar price in the global market is considered the major reason for the domestic price hike, which is also attributed to soaring prices of sugarcanes in the country.
The MARD estimates that the country will have to import as many as 150,000 tons of sugar from now to the end of August to meet local demand. The sugar imports, thus, are inevitable.
Increasing sugar prices and the sugar shortage have triggered smugglings of Thai sugar from Cambodia into the country through border gates in the southeastern region.
In a move to ease the situation, the MoT and the Ministry of Agriculture and Rural Development (MARD) have recently sent a proposal to the government, asking for the removal of granting quotas and licenses on sugar imports.
The move would help traders make faster purchases abroad, said an official from the MARD.
"It will be better for businesses, but imports will still depend on sugar prices," the official added.
The government now requires sugar importers to obtain permission for each purchase and imposes a 40- per cent import duty.
So far this year, Vietnamese firms have imported around 60,000 tons of mainly white sugar to offset the domestic shortfall, the official said. The duty has been temporarily halved to 20 per cent to assist importers, officials have said.
"The sugar imports must be decided early, before August 30, ahead of the new crushing season so importers can still make a profit, given farmers are planting much more sugarcane now," Tam said. The government was expected to make a decision soon, officials said.
Vietnam's sugar crushing season often lasts between October and April, but many refiners have stopped already due to the shortage of cane following a drought last year.
Government figures show Vietnam produced 388,000 tons of refined sugar in the first two months this year, up only 0.6 per cent on year.
Investment, Liberated Saigon
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