Vietnam allows hike in retail prices of petroleum products

The price of RON 92 gasoline was allowed to increase on March 7 by VND 2,100 (US$0.10) per liter to VND22,900 (US$1.10). The price of diesel fuel also was allowed to increase by VND1,000 (US$0.048) to VND 21,400 (US$1.02). The price of kerosene went up to VND 20,800 (US$1.00) per liter and the price of fuel oil rose to VND18,800 (US$0.90) per liter. The Minister of Finance, Vu Thi Mai, after reaching agreement with the Ministry of Industry and Trade, announced the price hikes. The Ministry said that all the regulatory tools had been utilized, including the slashing of import tax rates on fuels to 0-3%, which resulted in a loss of VND 20 trillion (US$962.46 million) in revenues last year, and an additional VND3.9 trillion (US$187.68 million) during the past two months. The Finance Ministry emphasized that fuel prices will be monitored under the mechanics of Decree 84, which means that if the global prices increase, local prices will also increase. But if the global prices go down, the price stabilization fund deduction will be increased, while import tax rates will have to be recovered first before fuel prices can be lowered.
Vietnam abolishes import duty on diesel fuel
Vietnam abolished the diesel import duty on March 1, after it allowed fuel distributors to raise retail prices of petrol and oil products by as much as 12%. Import taxes on gasoline and jet fuel remained the same, however. Although the Finance Ministry did not give any explanations for the move, it had often resorted to import tax reductions in the past as a way to deal with price increases in the global market. Economists have expressed concern over inflation, stating that the price increases will affect as many as 70 products because fuel is a vital part of production. They said that the move could have a negative impact on the 2012 inflation target. The government wants to keep inflation this year at 9%, after prices in 2011 jumped by 18.58% year-on-year. Inflation in February reached 16.44%, which was lower than January’s inflation rate of 17.27%. (March 8, 2012)