Industries hit hard by rising fuel prices

By Anh Minh June 28, 2022 | 04:44 pm PT

Buses are seen at Giap Bat Bus Station in Hanoi. Photo by VnExpress/Pham Chieu

Sao Viet Bus, which operates on the northern route Hanoi – Lao Cai Province, is struggling to survive as the price of fuel, which accounts for 50 percent of costs, keeps rising.

"If we do not operate regularly, we will lose our slots at bus stations, but the more we operate, the more we lose because of surging costs," Do Van Bang, CEO of Sao Viet’s parent company, Minh Thanh Phat, said.

Sao Viet has reducing the number of trips to cut costs.

Bang said the only way to break even is to increase fares by 15-20 percent, but with competition being intense, the time is not right for it.

But the company would not be able to absorb the losses for long, he added.

The company is one of many to lose due to the 39 percent rise in fuel prices since the beginning of this year.

Nguyen Manh Hung, CEO of transport firm International Logistics, said fuel accounts for 40 percent of costs, and so the increases in their prices has affected the company.

It is not easy to negotiate price hikes with customers, he said.

"We are trying to cut all other expenses to survive the fuel price surge."

Half of all fishing vessels in Vietnam have stopped going out to sea after diesel prices rose 1.7-fold since the end of last year, the Ministry of Agriculture and Rural Development said in a recent report.

The cost of operating boats has risen by 35-48 percent, while seafood prices have only gone up marginally, it added.

The chairman of garment company TNG, Nguyen Van Thoi, said its business has not been majorly affected by the fuel price surge as contracts have already been signed for the rest of the year.

But it is seeing prices drop as consumer in its export markets are cutting spending due to inflation, he said.

Huynh Thi My, general secretary of the Vietnam Plastics Association, said plastic companies are also in trouble as they cannot negotiate price hikes with foreign customers.

Businesses are looking for new markets and suppliers with lower prices, she added.

Businesses are petitioning for more tax cuts to lower fuel costs.

The Ministry of Finance should reduce special consumption tax (currently at 10 percent) and value added tax (also 10 percent) on fuel so that businesses face no more burden, Bang of Minh Thanh Phat said.