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Economists criticise petrol price management scheme
Economists have criticised the Government’s petrol price management scheme, saying that government agencies allow petrol importers to raise retail prices whenever they complain about losses.
The retail petrol price has increased for the fifth time this year by 700 dong per litre following price increases of electricity, water, cement, fertiliser and paper, all of which have sparked concerns about the return of high inflation.
Dr Le Dang Doanh, a senior economist, has pointed out a paradox in the price management of the Government: While it is trying to encourage production and provide credit, it is also raising the prices of many goods. Doanh said that Vietnam may fail to encourage production with its demand stimulus packages, supposedly the top priority now.
Doanh acknowledged that petrol price increases are unavoidable as crude oil and petrol prices in the world have increased sharply. “However, I have to remind you that when the world’s petrol price was $147 per barrel, the petrol price in Vietnam was 14,500 dong per litre. Now the world’s price is around $70 per barrel, while the domestic price is 14,200 dong per litre,” Doanh said.
“How high will petrol prices be on the domestic market if the world’s price increases further? What will the Government do in this case?” Doanh questioned.
According to Doanh, the petrol price now in Vietnam is much higher than in Singapore and China.
Meanwhile, Dr Ngo Tri Long, Former Deputy Head of the Market and Price Research Institute under the Ministry of Finance, said that the petrol price increases have not been productively controlled, therefore, people meet difficulties every time prices increases.
“Petrol importers always complain that they incur losses and ask for petrol price increases. Meanwhile, government agencies just rely on the reports from the importers to make a decision on raising petrol retail prices, while they don’t carry out necessary verification.
“In fact, enterprises have been making fat profit by trading petroleum, while only people meet difficulties from petrol price hikes,” Long said.
Vu Dinh Anh, Deputy Head of the Market and Price Research Institute, also said that when adjusting domestic prices in accordance with the world’s market, the Government needs to think about how to minimise the negative effects of the price hike.
While Anh believes that the petrol price increase will not increase the likelihood of inflation, Doanh asserts that the petrol price will lead to a new price increase wave, simply because petrol and electricity are the two important input materials for many industries.
Doanh has warned about a new high inflation wave.
“Information has come to people that the global economy is recovering. Even the ‘psychological recovery’ would be enough to lead to price increases, while the price increases are coinciding with the loosened monetary policy of the Government,” he explained.
VietNamNet, VTC
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