Vietnam’s diesel purchases from members of the Association of South-east Asian Nations (ASEAN) have risen after a tax cut on imports from the region took effect in January, with more spot cargoes coming from Singapore and Malaysia, sources said.
Fuelled by the tax incentive, diesel shipments from Singapore to Vietnam surged almost five-fold to about 107,000 tonnes last month, from around 23,200 tonnes in January, customs data from the city-state showed.
“Recent tenders were mostly awarded on a free-on-board Singapore and Malaysia basis so trade flow has changed a bit,” a fuel importer in Vietnam said.
But the change in flows for Vietnam, which usually buys diesel from China and Taiwan, could be short lived if the country lowers tariffs for oil product purchases irrespective of their country of origin, fuel importers cautioned.
“I don’t think it will last for long, maximum till the end of April ... our government will reduce import tax for products soon, otherwise importers will complain,” the importer said.
Vietnam government officials could not be immediately reached for a comment.
Earlier this year, the country lowered taxes on diesel imports from ASEAN members to 5 per cent, gasoline to 20 per cent and fuel oil to 0 per cent. It levies a tariff of 30 per cent on diesel and 35 per cent for gasoline and fuel oil imports from most non-ASEAN countries, according to traders.
Vietnam’s fuel importers are now asking for a “Form D”, which is a certificate of origin issued by the respective ASEAN country’s customs authority to prove the origin of the oil product, when they issue spot tenders.
“At the moment, the import taxes for petroleum products in Vietnam are very high, so if the cargo (is from ASEAN), we will have to pay less tax,” a second fuel importer said.
This has started to re-draw spot trade flows, although overall diesel imports volumes remain unaffected, traders said.
The impact on gasoline flows has been minimal as Vietnam, under a separate free trade agreement, taxes imports of the fuel from China at 20 per cent, same as that for ASEAN nations.
Vietnam imported about 1.3 million tonnes of oil products during January to February, down 7.6 per cent from the same period last year, government data showed. Diesel and gasoline accounted for most of the imports, traders said.