BUSINESSES CONTINUE TO STRUGGLE WITH PETROL PRICES

While the reduced environmental protection tax lowered petrol prices from April 1, most transport enterprises are struggling.

Retail petrol prices fell by more than VNĐ1,000 per litre following the latest adjustment by the Ministry of Industry and Trade and the Ministry of Finance. Accordingly, the retail price of RON95 bio-fuel dropped by VNĐ1,039 to a maximum of VNĐ28,153 (US$1.23) per litre, while E5RON92 was adjusted down by VNĐ1,021 to no more than VNĐ27,309 per litre.

Meanwhile, diesel 0.05S went up from VNĐ1,447 per litre to VNĐ25,080, and kerosene increased by VNĐ1,519 per litre.

According to the ministry, this was the second decline following seven consecutive hikes in petrol prices in 2022 that caused price increases of over VNĐ6,500 per litre.

“If the environmental protection tax stayed the same, the domestic gasoline price in this operating period would have increase,” a ministry representative said.

Vũ Tuyết Hạnh, a representative of Cường Thắng Transport Company, specialising in transporting goods on the North-South route, said: “Transport enterprises expect gasoline prices to drop more as the adjustment in petrol and oil prices does not help reduce the burden on enterprises. The transport business continues to face difficulties. Many vehicles have had to stop working.”

Nguyễn Ngọc Thành, director of Kim Phát Transport Company, said: “Fuel for container trucks usually accounts for about 40 per cent of the cost of transportation. But from mid-2021, the oil price has increased by about 50 per cent, and businesses cannot increase freight rates by that level.”

Other transport enterprises said if freight rates increased sharply, they would undoubtedly lose customers, but if they didn’t they would continue to lose money.

Nguyễn Hồng Đông, a driver on the Hà Nội - Nội Bài route, told Việt Nam News: “Currently, the price of gasoline is high, and my income is less. I will lose customers if I raise the price. Some of my colleagues have had to give up driving their cars and stay at home because their income is not enough to cover expenses.”

Bùi Danh Liên, an expert at the Hà Nội Transport Association, said the association’s businesses were worried gasoline prices were still too high.

“More cars are in the parking lot, and companies are forced to reduce routes and trips. If gasoline prices continue to stay high, transport enterprises will not be able to hold out,” he said.

“The impact from the COVID-19 pandemic has brought businesses to a standstill, with no revenue, while the cost of driving tests and petrol increased sharply recently, leaving them struggling to survive.”

Liên said many businesses would be forced to sell cars or even go bankrupt.

The aviation industry is also in a bind because of soaring fuel prices. Vietnam Airlines calculates that if the price of jet fuel remains at US$130 per barrel for the whole of 2022, the airline’s cost could increase by VNĐ5.7 trillion. If a barrel goes up to $160 as forecast, costs will rise to VNĐ9.12 trillion, exacerbating the expected loss in 2022.

Experts said sea freight rates to the US and European routes, which increased again from the beginning of the year, were expected to go up again, causing Vietnamese import-export businesses to struggle.

Dương Ngọc Trung, deputy general director of SDS - MP Logistics, said the price of petrol had increased by 30 per cent from last year, raising transportation charges another 5-10 per cent.

Economists said petroleum products were currently subject to many taxes simultaneously. While petrol is not a luxury good, it still has to bear excise tax.

Economist Ngô Trí Long said it was advisable to reduce the special consumption tax on petrol again to ease inflationary pressure and avoid impacting people and businesses further.

Expert Đinh Trọng Thịnh said the special consumption tax should be levied on harmful goods and services and luxury goods, not on petrol, an essential commodity. Moreover, petrol was already subject to an environmental protection tax.

Director of the MoIT’s Domestic Market Department Trần Duy Đông said that if petrol prices continued to rise, it would consider reducing the special consumption tax.

“We still need to calculate longer and have more scenarios,” Đông said. “The ministry will propose a scenario to continue to reduce taxes on petrol, such as the environmental tax, special consumption, VAT and diversification of supply.

Source: VNS