A fuel station in Ho Chi Minh City
In a bid to keep a lid on Vietnam’s surging inflation rate, Prime Minister Nguyen Tan Dung has ordered a freeze on fuel prices until June.
Speaking at a meeting Saturday with state-run Vietnam National Petroleum Corp. (Petrolimex), Dung said the government would help fuel traders cover losses caused by the widening gap between selling prices and the escalating cost of fuel on the world market.
Inflation hit a 12-year high of 15.67 percent in February.
Since then world oil prices have continued to climb, hitting a record US$110 a barrel.
Dung said the task of balancing the fuel supply and demand was a national priority.
He instructed Petrolimex and major domestic fuel importers to retain current fuel prices until at least June after the latest price hikes last month caused economic hardship across the country.
Dung also promised the government would keep the import tax on fuel at zero percent.
In February, the Ministry of Finance announced the retail price of 92-RON gasoline, the most common grade used in the country, would increase by 11.5 percent to VND14,500 (91 cents) a liter from VND13,000 (81 cents).
The RON, or research octane number, is a measure of the quality of gasoline.
The price of 95-RON gasoline was raised to VND14,800 (93 cents) from VND13,300 (83 cents).
Kerosene and diesel increased by VND3,700 to VND13,900 a liter (87 cents).
Despite the increase in fuel selling prices, domestic fuel traders have still incurred heavy losses, estimated around VND1 trillion ($63 million) a month.
Action in the offing
The government also announced financial assistance for poor households and fishermen hit hard by increased costs, including higher fuel prices, Dung said.
He instructed the ministries of finance and of industry and trade, and the State Bank of Vietnam to keep a close eye on domestic stocks and prices of fuel.
The Ministry of Finance was instructed to boost subsidies to affected fuel traders.
Dung directed the State Bank of Vietnam to meet the foreign currency demand of domestic fuel traders.
The Ministry of Industry and Trade was asked to closely monitor retail prices and take swift action against fuel smugglers, speculators and profiteers.
At the meeting, Dung acknowledged the range of hurdles facing economic growth, including a gloomy world economy, the depreciation of the US dollar and further increases in the price of construction materials and food.
He said he’d asked the ministry to take drastic measures to reduce the trade deficit.
Last Friday the Ministry of Construction confirmed there would be no hike in cement prices until at least the second quarter.
In related news, the Prime Minister Nguyen Tan Dung announced many property investment incentives at Ha Tinh’s Cau Treo Economic Area last October.
Businesses at the Cau Treo Economic Area are only taxed 10 percent on their income for the 15 first years of operation.
Cau Treo enterprises receive a tax exemption on their income for four years after they begin earning profits.
They also get a 50-percent tax reduction for the next nine years.
Additionally, workers at the area receive a 50-percent reduction in personal income tax.
Materials and components imported from overseas to supply firms in the economic area are not required to pay taxes for the first five years of operation.
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