Vietnam has allowed distributors of petroleum products to raise selling prices without having to seek government approval whenever global oil prices increase, industry insiders say.
Tran Ngoc Nam, deputy general director of Petrolimex, said a decision announced by the Ministry of Finance on Wednesday also allows fuel distributors to decide on when to hike prices.
Immediately after the move, prices of oil products were raised for the second time in two weeks. The most common grade of fuel in Vietnam, 92-RON gasoline, now retails at VND21,900 per liter, up 4.3 percent.
Fuel traders had raised prices on July 20, the first increase after they were cut five times since the beginning of this year.
Prior to Wednesday's hike, industry insiders had said with global oil prices rising, it was necessary to either lower import taxes or increase retail prices.
The Finance Ministry, however, opted for a price hike, keeping all tax rates unchanged.
Ngo Tri Long, former deputy head of the Market and Price Research Institute, said it is uncertain whether fuel distributors actually faced losses and needed to raise prices. He said these companies had already imported a large amount of fuel when prices fell in June. It is therefore necessary for the authorities to check the inventory levels to see if the hike is justified, he said.
Long said since Petrolimex, Petec and PVOil hold 90 percent of the domestic fuel market share, with Petrolimex alone accounting for 60 percent, the government should not give businesses complete pricing freedom.