New road fee upsets transport companies

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A driver pays toll at a booth outside Ho Chi Minh City

The government's latest decision to slap a road-use fee on vehicles while also increasing highway tolls has been panned by transport businesses for being "unreasonable" given the current economic situation.

A circular issued earlier this month requires automobiles to pay VND1.56-12.48 million (US$74.18-593.48) per year at local vehicle registries which are in charge of certifying roadworthiness. They can be paid annually or when obtaining the roadworthiness certificates at stipulated intervals of three to 30 months.

Earlier, at the end of last month, the Ministry of Transport's proposal to increase fees collected at tollbooths by up to 3.5 times until 2016 also got the green light.

The toll for cars with fewer than 12 seats will go up to VND35,000 ($1.66), and for trucks, to VND280,000 ($13.31).

Speaking to Vietweek, Tran Huy Hien, general secretary of the Vietnam Logistics Association, said once the new road-use fee is collected from January 1, transport companies would be paying double fees since their vehicles already pay a fee to use toll roads.

Tolls already account for 20 percent of transporters' costs, he said.

Besides bad infrastructure, a plethora of fees and taxes is making transport costs too high in Vietnam compared to other countries, he said.

In fact, the 15 different fees and taxes including the latest one in the country account for 50-60 percent of total logistics costs.

Mai Hoai Nam, deputy director general of Orient Overseas Container Line Vietnam, complained that considering that demand for transport services is lower than supply in the current economic situation, the government's recent decisions are "unreasonable."

Le Hieu Dang, a legal expert and former vice chairman of the Vietnam Fatherland Front Central Committee in Ho Chi Minh City, which monitors government activities and policies, called the latest changes to the fees "irrational."

People would think that the government is trying to collect taxes from all sources to compensate for its "big budget losses," he said, warning this could wipe out businesses.

Bui Van Quan, chairman of the HCMC Transport Association, said that his association, as the representative of hundreds of businesses, has appealed against the new road-use fee to the government office and finance and transport ministries.

The association was also unhappy with several other provisions in the new circular.

For instance, it said, tractors and the semi-trailers and trailers they tow are all separately taxed though the latter two cannot operate on their own, and their cabs cannot function as a transport vehicle without them.

So it is impossible to separate tractors and their trailers and tax each of them, the association said in the appeal it filed on December 3.

It is also unreasonable that even when they are not in use due to reasons like natural disasters and business closure, automobiles are still subject to the fee, the association said.

This is against the government's own ordinance on fees and charges which defines fees as money that a person pays for services they use, it argued.

Practicability concerns

The government has decided that the road-use fees will be paid into a newly created road maintenance fund.

But Professor Nguyen Quang Toan of the University of Transport in Hanoi wondered if the fund would really help improve road maintenance.

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The fee, even if it achieves the collection target, would only be able to meet 20-30 percent of the current requirement for fixing the country's bad roads, he said. Thousands of kilometers more, which are being used excessively, would soon wear down too, he said.

Nguyen Manh Hung, chairman of the Vietnam Automobile Transportation Association, agreed, saying there is almost no hope that the quality of roads would improve because of the new fee.

Critics also raised concerns about the transparency of the fund, saying it is imperative that more independent associations are represented on the fund's management council.

The fund will be managed by a council headed by the Minister of Transport. Its members will be drawn from the ministry, and will include the deputy minister and the road transport chief.

The only independent organization to be represented on it is the Vietnam Automobile Transportation Association.

In Vietnam there are around 35 million motorbikes and 1.5 million cars. The transport ministry has estimated that road-use fees of more than VND6.8 trillion ($323.37 million) will be collected every year from cars and VND2.4 trillion ($114.13 million) from motorbikes.

Motorbikes will have to pay VND50,000-150,000 a year.

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