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Fuel prices criticized for small drops
Gasoline prices in Vietnam gained a total of VND3,000 per liter after the two latest price increases in early March and late April, yet on Wednesday dropped by a mere VND500 per liter.
“Such price management has run counter to the economic laws,” said economic expert Le Dang Doanh in a talk with Tuoi Tre.
Following the global downward trend of fuel prices, the Ministry of Finance could have reduced prices further, but it opted to increase the import tariff instead.
While imposing a modest price cut on fuel commodities, the Ministry of Finance also resumed the import duties on petroleum products, which were 0 percent prior to the cut.
Specifically, the import tariff levied on gasoline and diesel is 2 percent, while that for oil and fuel oil is 3 percent, a decision Doanh said has made the public lose their faith.
“Recovering the public’s trust, to me, is much more important than increasing budget collection from fuel imports,” stated Doanh.
Other experts told Tuoi Tre that while the shortcomings of decree no 84 on fuel trading management have yet to be rectified, the finance ministry should have slashed prices of all fuel commodities by a greater amount.
Cutting fuel prices will also assist businesses in these hard times of high unsold inventories and low consumption, they said.
The government has offered tax deferrals to help businesses, but lowered fuel prices can also help reduce production cost and boost consumption, experts added.
For their part, transport firms said the recent price cut does not help at all.
“A VND300 per liter cut slapped on diesel oil only reduces cost by 0.5-0.6 percent,” said Tuan, director of a company with 10 DO-fueled container trucks.
Hong Van, another container fleet owner, said most transporting firms in Ho Chi Minh City have yet to cut their service fares due to the tiny fuel price cut.
Meanwhile, Tuoi Tre found that many fuel wholesalers have increased commission rates for their dealers over the last week.
“Commission is now VND500 a liter, excluding transporting cost,” revealed Le Manh Nu Vinh Son, head of the Vinh Son fuel retailer in Ba Ria - Vung Tau.
Meanwhile, S., sales executive of a HCMC-based commercial firm, said commission has been increased by up to VND650 a liter.
“This is three times higher than rates prior to the fuel price hike on April 20,” he said.
Criticism rejected Nguyen Tien Thoa, head of the Price Management Agency under the Ministry of Finance, said the ministry had thoroughly considered the issue before announcing the price cuts, together with the 2 percentage point hike in fuel import tariffs.
“As directed by the government, prices should be adjusted in a way that can balance the interests of the government, wholesalers, and consumers,” Thoa told a press briefing yesterday.
“Import duties should be resumed since they have been reduced to zero for too long.
“While it’s stipulated that the tax rates should be 20 percent for gasoline, and 15 percent for diesel, we only increased it by 2 percent now,” he said.
Asked if the price cuts were implemented due to pressure from the media, Thoa confirmed that the adjustment was merely based on factors contributing to fuel prices.
He also said the Ministry of Finance is considering amending decree 84 on fuel trading management.
“It’s now stipulated that prices be adjusted based on the average price over 30 days, and this duration is expected to be reduced to 10 or 20 days,” he said.
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