Sugar market faces bitter challenges ahead   The Vietnamese sugar industry has historically been insulated from global volatilities and competition as a consequence of governmental market protections. However the gloves are about to come off as free trade pacts are poised to come into effect. Once the ASEAN Trade in Goods Agreement (ATIGA), which aims at establishing the region as a single market by 2015, becomes effective, Vietnamese sugar producers are facing stiff regional competition. The problems are only going to be compounded by the entry of leading worldwide sugar producers from the EU and US into the domestic market upon the signing of the Vietnam-EU Free Trade and Trans Pacific Partnership (TPP) trade pacts. Based on ATIGA, most duties on all products will be abolished by 2015 with some limited flexibility to protect up to 7% of tariff line products through 2018. Accordingly, some Vietnamese products, including sugarcane may be allowed to maintain a tariff of 5% after 2015 and through 2018. At a recent meeting between the Ministry of Finance and the Vietnam Sugar and Sugarcane Association (VSSA), a proposed was made to boost the import duty of sugar to 15%, if imports cause difficulties for domestic sugar production. VSSA Vice President Do Thanh Liem brought up the fact that imported sugar in line with WTO and ATIGA commitments very well may also face tough competition from illegally smuggled sugar imports. Imported sugar must bear the cost of the tariffs, Value Added Tax (VAT) and business income tax, which collectively serve to increase the ultimate sales price to the consumer. In contrast, smuggled sugar doesn’t have to bear these costs and can be sold on the black market at a much lower price. Faced with the challenge of rigid competition from foreign imports and smugglers, Vietnamese processors must clearly find better production methods and technologies if they expect to remain in business. So what is the best alternative to protect the interests of sugarcane farmers? Many have suggested that farmers find an alternative crop to replace sugarcane. However, in some parts of the country, there is no suitable alternative.  Sugarcane does not require highly fertile soil and in these areas it is one of only a handful of corps that will grow. Therefore, in these areas farmers must stick to sugarcane cultivation. In spite of great investment and long-term protection, the domestic sugar and sugarcane industry hasn’t developed as strongly as it has in other countries in the region or the world. The fact remains, however, that with high-tech modernised technologies and equipment, foreign sugar producers are more efficient than domestic producers.  Local producers are in no immediate position to compete in terms of quality or price with foreign competitors. In 2015, if the domestic sugar market should open without any governmental protection, the sugar import quota from regional countries will be eliminated in compliance with ATIGA and this may signal the death of the sugarcane industry in Vietnam. Nobody knows for sure what the future of domestic sugar and the sugarcane industry holds. However, we do know unless drastic measures are undertaken to revolutionalise the industry, there is no bright future for it and many bitter challenges lie ahead. VOV