Vietnam’s sole oil refinery asks to self-regulate import duties

By Bach Duong, Bui Hong Nhung   May 13, 2016 | 09:21 am GMT+7

The Dung Quat oil refinery, in an attempt to reduce losses after certain Free Trade Agreements (FTA) come into effect,  is seeking approval from the Ministry of Finance to self-regulate import taxes on oil products.

Local enterprises are required to pay import duties for oil products bought from Dung Quat and from overseas to increase state revenue and control prices.

However, the FTA between Southeast Asian countries and Korea, which took effect at the start of 2016, coupled with preferential tariffs under the ASEAN Trade in Goods Agreement, have make import rates on Dung Quat’s oil products higher than those from foreign markets.

vietnams-sole-oil-refinery-asks-to-self-regulate-import-duties

Source: Table of tariffs under ASEAN– Korea Free Trade Agreement (AKFTA) and ASEAN Trade in Goods Agreement (ATIGA)

As a result, Petrolimex Corporation, Vietnam’s top oil distributor and Dung Quat's biggest client, has switched to Korea for oil product imports, and other customers have started to follow suit.

Petrolimex imported 90 percent of its diesel from ASEAN last year, while other customers of Dung Quat also imported from 60 to 80 percent.

On March 18 this year, the Ministry of Finance fixed an import rate of 18.08 percent for retail gasoline and 0.6 percent for diesel from the Dung Quat refinery, which means its partners will lose 1.92 percent on gasoline and 6.4 percent on diesel.

“Dung Quat’s oil products are affected by both FTAs and retail prices,” said the operator of the refinery, Binh Son Refining and Petrochemical Company.

The company added that it has reduced retail prices for each barrel of gasoline by $1 and by $2.92 for diesel to compete with foreign rivals, which could cause its annual revenue to fall by seven to ten percent.

The refinery has asked the ministry to let it decide the import duty that should be paid on its oil products before a new development strategy is launched.

The Dung Quat refinery was launched in 2005 and started selling refined oil products in May 2010. Over the 2010 to 2015 period, the refinery produced an average of 36 million tonnes of oil products per year, making up 35 percent of domestic consumption, PetroVietnam said.

 
 
go to top