High gas prices gouge Vietnamese consumers

By Bui Hong Nhung   September 22, 2016 | 04:56 pm GMT+7
High gas prices gouge Vietnamese consumers
Consumers buy gasoline at a station of Petrolimex. Photo from website of the Ministry of Industry and Trade.

Lower tax rates on imported oil products haven't impacted pump prices.

Pump prices continued to rise throughout 2016 even as import duties on petroleum products fell, local media reported.

Petrolimex, Vietnam’s largest oil distributor, raised retail prices on gasoline by 1 percent to VND16,930 ($0.76) per liter on September 20. The company adjusts its prices every 15 days based upon a range set by the Ministry of Industry and Trade.

Petrolimex has raised its pump price eight times and slashed it eight times in 2016, but the latest hike was the third consecutive jump.

According to a Thanh Nien report, Vietnamese traders say local retail prices only reflect global market trends, but economic experts claim the prices place an undue burden on Vietnamese consumers.

The tariff on imports from South Korea has fallen to 10 percent this year, much lower than the usual 20 percent rate still applied on imports from other countries. And yet, the tax cut has not benefited consumers.

Customs data showed that the country imported one million tons of gasoline from South Korea in the first eight months this year -- a nearly six-fold increase from a year ago.

A large fuel trader in the south said South Korean gasoline now accounts for 70 percent of his business, compared to only 10 percent in the past. He declined to discuss profit margins.

Ngo Tri Long, former head of the Research Institute of Market and Prices under the Ministry of Finance, said lower tax rates have hurt the state budget, while at the same time have not done much.

Only oil traders have financially benefited, he said.

Long said Petrolimex, Vietnam’s largest oil importer, earned pre-tax profits of VND2.3 trillion during the first half this year, up 44 percent against the same period last year. Profits earned in oil products trading accounted for more than 50 percent of that sum.

Economist Nguyen Minh Phong said that the government should require companies to make public input costs of gasoline so everyone can know exactly how much a liter of gasoline should cost.

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