On April 5, Deputy Minister of Finance Truong Chi Trung signed a decision No. 23/2006/QD-BTC to cut import tariffs for petroleum products, which will stabilise the local market amidst rising world oil prices.
According to the decision, from April 7, most petroleum products will enjoy a 0 percent tax, instead of the current rate of 5 percent. This includes all types of leaded and non-leaded engine petroleums, aeroplane petroleum, kerosene and some solvents. However, it did not say anything about possible changes in retail prices.
Crude oil prices have steadily climbed on the world market, reaching 67 USD per barrel on April 5. Predictions by the Market Regulator Board say that crude oil could fluctuate at high levels in the second quarter of 2006.
Vietnam exports crude oil, however, most of the country's consumption of refined petroleum products are met with imports. In the first quarter of 2006, it imported 2.6 million tonnes of petroleum products at a total value of 1.25 billion USD, a 11 percent fall in volume but a 16.6 percent rise in value compared to the same period last year, due to higher prices in 2006.
Tariffs have been used frequently as a buffer to mitigate fluctuations of the world oil markets. It has been calculated that petrol importers lose 134 VND (0.01 USD) per liter when world fuel prices reach 65 USD per barrel.
Recently, the Ministry of Finance suggested that petrol prices should be adjusted monthly based on global prices instead of tinkering with the import tariffs.
That would eliminate state subsidies for petroleum enterprises and ensure consumers benefited amidst the volatility of global prices, the ministry opined.
Last year, Vietnam imported 11.3 million tons of petroleum products worth 5.1 billion USD, a 2.6 percent increase in volume and a huge 40 percent in value over 2004.
Communist Party of Vietnam - (07/04/2006)