Most gasoline and oil businesses recently surveyed said the fuel market would be more transparent if they had the right to set their own prices.
The Ministry of Industry and Trade is drafting a new government decree on gasoline and oil trading that proposes two options.
Most gasoline and oil businesses recently surveyed said the fuel market would be more transparent if they had the right to set their own prices. The Ministry of Industry and Trade is drafting a new government decree on gasoline and oil trading that proposes two options.
Option 1 includes government regulation of gasoline prices as at present, but would correct the base price formula by adding actual costs incurred by enterprises, Such costs have be previously left out of government fuel price calculations.
In option 2, the government would only publicize a suggested price and some elements used to calculate it. Based on these figures, enterprises could then add in their own business costs, shipping costs, and premiums to determine and announce their own retail prices.
A survey of 20 gasoline and oil wholesalers and distributors in Ho Chi Minh City and Hanoi showed that 80% said they agreed with option 2 because the market would be more transparent if they could decide their own prices.
A Saigon Petro manager said that if the selling price were to be set in accordance with reality, it would be easier for businesses to import and distribute gasoline and oil.
“However, within the framework of price self-determination, the price calculation still needs States management so that the correct calculation of input prices is made for wholesalers, especially importers,” the manager said.
Normally, it takes 15-20 days for imported gasoline and oil to arrive at wholesalers’ warehouses. Therefore, the State needs to base retail prices on the price of fuels when they arrive at warehouses, he said.
Similarly, the director of a wholesaler in the southern province of Dong Nai said the fuel market would be more competitive if enterprises could set their own prices. He said consumers would be able to buy gasoline and oil at reasonable prices, while a minimum profit for businesses would be ensured.
He added that if the current state management over the market does not improve, more wholesalers and distributors will leave the market this year.
Many distributors have struggled since June 2022, incurring billions of dong (VND1 billion = $41,666) in losses, he noted.
However, some enterprises are worried that if wholesalers are permitted to set retail prices, they may cause market disturbances.
A manager at Thu Duc Trading and Import-Export Joint Stock Company (Timexco) said there needs to be a roadmap towards empowering wholesalers, including trial phases, otherwise Vietnamese businesses risk being caught in a “big fish eat small fish” situation.
Of gasoline and oil market businesses, 70% are state-owned enterprises, so when they have too many advantages, they will easily import fuels at good prices and sell them on the local market at low prices. Thus, private enterprises with small capital will be excluded from the market and a monopoly may occur, the manager said.
Dinh Trong Thinh, a senior lecturer at the Vietnam Academy of Finance, said it is not the right time for Vietnam to float the price of gasoline and oil. “The State still has to, for example, set a ceiling price so that businesses can compete on their own costs to reduce the selling price… Gasoline and oil is a strategic item on the list of price stabilization,” he stated.
Tran Van Lam, member of the National Assembly’s Finance and Budget Committee, also said essential commodities such as gasoline and electricity need State management, as Vietnam is a socialist-oriented market economy.
Under the draft decree, the ministry also proposed shortening the timeframe in which regulated gasoline and oil prices are reevaluated from 10 days to seven days.
However, most businesses proposed the timeframe should be reduced to three or five days, saying that they buy fuel a month before they sell it because it takes time for gasoline and oil from abroad or oil refineries in Vietnam to arrive at their warehouses.
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