"The Invoice Loophole: A Smuggler's Tool to legitimate smuggled sugar

6.8 tons of smuggled sugar were temporarily seized by the Ho Chi Minh City Market Surveillance Department at T.M.D.N Company Limited (Ho Chi Minh City)

Multiple duplication of sugar

On August 23, 2024, Market Surveillance Team No. 3, under the Phu Yen Provincial Market Surveillance Department, conducted an inspection of a truck bearing license plate 78C-037.xx and discovered 16 tons of granulated sugar on board. The packaging indicated that the sugar was produced in Thailand but lacked a Vietnamese-language label.

At the time of the inspection, Mr. P.H.H (residing at Phu Tho 2 neighborhood, Hoa Hiep Trung ward, Dong Hoa town), who was directly driving the vehicle and managing the aforementioned sugar, presented a confiscated asset sale invoice number 0092993 dated May 21, 2024. Upon cross-checking the actual goods against the invoice, the task force discovered an inconsistency: the invoice was issued on May 21, 2024, but the packaging indicated production dates in June 2024 (after the invoice date).

According to the Vietnam Sugarcane and Sugar Association, statistics from the International Sugar Organization (ISO) estimate that 523,098 tons of sugar were smuggled into Vietnam from Cambodia and Laos in 2023, and an estimated 326,894 tons in the first six months of 2024.

The recent prevalence of sugar smuggling fraud has revealed several alarming signs. For instance, the origin of confiscated smuggled granulated sugar is often unclear, as it is considered state-owned property. After being tested and found to meet national standards, this seized sugar is auctioned off. However, the practice of returning illegally seized Thai sugar to the market has exposed a flaw in this system.

Smugglers can "replicate" the amount of smuggled sugar entering the market multiple times by using auction invoices. This practice was discovered by the Vietnam Sugarcane and Sugar Association during an inspection and commendation of the Phu Yen Provincial Market Surveillance Department's handling of smuggled sugar cases in June 2024. In the eight cases accessed by the association, a total of 391.38 tons of smuggled sugar were inspected, but authorities could only seize 44 tons (11.2%). The remaining 347 tons of smuggled sugar (7.8 times the amount seized) had already entered the market. The Vietnam Sugarcane and Sugar Association identified the "invoice rotation" technique as the cause of this loophole, as inspections only verified the quantity on the invoice rather than the origin as required by law.

Administrative treatment is less effective

According to the Vietnam Sugarcane and Sugar Association, many cases of sugar smuggling and trade fraud have only been subject to administrative penalties. For example, in Quang Tri province, in just 10 months of 2023, authorities along the border and along Route 9 seized nearly 300 violations, involving 663 tons of foreign-origin sugar. All seized smuggled sugar was white sugar and refined sugar produced in Thailand, but only a few cases were prosecuted, with the rest being administratively handled.

On transportation routes, many trucks transporting Thai sugar without documents proving its origin have been discovered, but the amount seized is insignificant, and most are only subject to administrative penalties, leading to an increase in quantity and scale. This shows that administrative measures have been less effective.

At the end of April 2024, Market Surveillance Team No. 1 of the Ninh Thuan Provincial Market Surveillance Department, in coordination with the Traffic Police Department of Ninh Thuan Provincial Police, inspected a truck with license plate 65H-013.xx traveling north-south and temporarily detained 4 tons of smuggled sugar on the vehicle. Mr. T.T.T, residing at To 8, Binh Hoa hamlet, My Khanh commune, Long Xuyen city, An Giang province, who was directly driving the vehicle and managing the goods, could not present invoices or documents proving the legality of the shipment.

Previously, during a surprise inspection of T.M.D.N Co., Ltd. in Bau Tre 1 hamlet, Tan An Hoi commune, Cu Chi district, Ho Chi Minh City, the Ho Chi Minh City Market Surveillance Department discovered and seized 6.8 tons of smuggled granulated sugar originating from Cambodia. According to the Ho Chi Minh City Market Surveillance Department, the lower price of foreign granulated sugar compared to domestic products has increased smuggling, trade fraud, and the illegal transportation, trading, and storage of foreign granulated sugar, causing revenue loss and severely affecting domestic sugar-producing enterprises and sugarcane growers. To disguise themselves, transporters and consignees still transfer goods from large vehicles to small transfer vehicles at night in suburban parking lots such as Binh Chanh, Hoc Mon, Cu Chi, and District 12 for transportation into the city for consumption.

Also, according to the Vietnam Sugarcane and Sugar Association, the sale and transportation of Thai sugar in major urban markets is very public and free. Sugar that violates labeling or traceability regulations is also circulated, and almost no one is prosecuted. Many measures have been applied, but the result is only administrative handling, and sugar kingpins have repeatedly committed sugar smuggling fraud over many years openly