Oil and gas prices in Vietnam’s major import market, Singapore, hit their lowest point in July last week, right around the same time they were peaking at home.
The price of RON 92, the most popular grade of gasoline in Vietnam dropped to around US$100 a barrel in Singapore on July 17--from $126.22 a barrel at the beginning of the month. Prices on the New York and London stock exchanges have also dropped since early July.
But they remain as high as ever in Vietnam.
Economist Ngo Tri Long, former deputy head of the Market and Price Research Institute at the Finance Ministry, said prices can be adjusted at least ten days after the latest change.
“It’s already been ten days since the prices were hiked on July 7," Long said. "The fact that there's still no signs of a coming adjustment just doesn't seem right."
The 1.62 percent price increase on July 7 pushed 92 RON gasoline to Vietnam's highest-ever price of VND25,640 (US$1.21) per liter just two weeks after a 1.3 percent hike on the price of the gasoline; it was the fifth hike of the year.
Diesel with 0.05 percent sulfur content also rose 1.28 percent to VND22,820 ($1.07) per liter on July 7, the same day the price of kerosene jumped by 1.81 percent to VND22,950 ($1.08) per liter.
Tran Ngoc Nam, deputy director of Petrolimex, said the corporation has been keeping tabs on world prices and reporting them to the Gasoline Price Management Board--a liaison between the Ministry of Finance and the Ministry of Industry and Trade--but the board hasn't called for price cuts.
“So far, the board has actively adjusted prices. Petrolimex and other retailers have rarely made requests, unless there’s an unusual, long-lasting development that hinders our business,” Nam said.
Finance Ministry officials said Vietnam’s oil and gas prices have stayed high because of different fees and taxes, including special consumption taxes and import tariffs.
Vietnamese oil and gas prices include 14-18 percent import tariffs according to officials.
Long said that while changes to the special consumption tax merit discussion at annual legislative meetings, the ministry can ask the government at any time to lower the tariffs by 2 to 3 percentage points to cut retail prices.
“The tax level was set when the economy was thriving, but now that the situation has become tough; the government could consider cutting it.
“The question is whether the ministry wants to reduce the tax or not, because it will largely effect income to the state budget,” Long said.
His counterparts, Nguyen Dinh Chien from the Academy of Finance at the Finance Ministry and Nguyen Minh Thuy at the Institute of Economics and Finance both made the same point: the government should cut import tariffs to reduce gasoline prices during such difficult economic times.
But Nam disagreed.
“Put yourself in the position of the Finance Ministry and weigh the potential pressure on the budget," the Petrolimex executive said.