Gasoline price fixed lower for 6 months vital to economic recovery

 Prof. Nguyen Mai
By Prof. Nguyen Mai
Tue, March 15, 2022 | 5:15 pm GMT+7

The Russia-Ukraine conflict is beyond our expectations, and no one knows when it would end.

Escalating oil prices and global supply chain disruptions make it difficult to predict what the next few months may hold.

Forecasts of Vietnam’s economic expansion at 6.5 percent or 7 percent is optimistic. This could only be achieved if we remain largely unaffected by global turbulence and maintain the country’s macro fundamentals.

Forecasts of Vietnam’s economic expansion at 6.5% or 7% is optimistic. That could only be achieved if we remain largely unaffected by global turbulence and maintain the country’s macro fundamentals.

We have experienced two stages of response to the Covid-19 pandemic. Before April 2021, Vietnam was praised as a typical success thanks to suitable anti-pandemic measures, despite an underdeveloped health system.

But from April 2021, things changed as the pandemic spread from Ho Chi Minh City to 18 other provinces.

Enterprises were then derived of autonomy in production as the government followed the “zero-Covid strategy”. Only when it shifted to “safe and flexible adaptation to Covid-19, with effective control of the disease”, could the economy commence gradual recovery.

Policy response in this case is a lesson to be learnt.

The price of oil has become a big problem. In the last two months, the domestic gasoline price has surged from VND22,000 ($0.96) per liter to VND28,000, and then VND30,000. Up to now, there is no solution to prevent oil prices from escalating, placing the economy under a negative impact.

After three months of gradual recovery from the pandemic, the transportation sector has been crippled by oil prices. Many businesses do not dare operate. Imagine if all transportation chains were broken, where would the economy go?

The government’s oil price policy response must be faster. Currently, the Ministry of Finance has proposed reducing the gasoline price by VND2,000 per liter, but the final decision is yet to come.

Lacking a firm decision to restrain oil prices would affect economic recovery and development. The government should look at oil prices with a long-term vision, in view of international integration.

Before Vietnam joined the ASEAN Free Trade Area (AFTA) and World Trade Organization (WTO), some senior officials worried that they may lead to a dent in budget revenue, worsening budget deficit. But actual exports often increased by 15-20%, narrowing the coffer deficit.

Though the increases in world oil prices have brought about damages, state-run Petrovietnam has earned a lot from crude oil exports. General Director Le Manh Hung said in the first two months of 2022, the state-run group’s revenue is estimated at VND118.73 trillion ($5.19 billion), exceeding 34% of its plan and rising 46% over the same period last year. The group’s budget contribution is estimated at more than $787 million, surpassing 52% of its plan and surging 48% year-on-year.

Oil prices affect the entire world. Upcoming oil and gas volatility remains unpredictable. If there are no new scenarios in price management, we would be helpless whenever oil prices rise or fall.

My suggestion is the government keeps gasoline prices at VND22,000-23,000 per liter from now to the end of June, so that the transportation sector could rebound, and the economy free itself from transportation disruptions.

Budget loss due to gasoline price reduction could be offset by Petrovietnam’s surplus income and a recovering transportation sector. Moreover, there would not be an economic crisis fueled by oil prices. This is one solution as applied in some countries around the globe.

*Prof. Nguyen Mai is former Vice Chairman of the State Committee for Cooperation and Investment (now the Ministry of Planning and Investment) and currently Chairman of the Vietnam's Association of Foreign Invested Enterprises (VAFIE).

Comments (0)
  • Read More
Vietnam to have 34 cities, provinces, instead of 63: Party chief 

Vietnam to have 34 cities, provinces, instead of 63: Party chief 

Vietnam plans to reduce the number of cities and provinces from the current 63 to 34, as part of a scheme to streamline its administrative apparatus, Party General Secretary To Lam said Friday.

Politics - Sat, March 29, 2025 | 4:18 pm GMT+7

Thailand’s digital ad spending predicted to grow 10% in 2025

Thailand’s digital ad spending predicted to grow 10% in 2025

Thailand’s online advertising spending in 2025 is forecast to grow 10% to THB35 billion (over $1 billion), based on a gradual rebound of the local economy and intense competition in the digital industry, according to the Digital Advertising Association of Thailand (DAAT).

Southeast Asia - Sat, March 29, 2025 | 3:39 pm GMT+7

US Defence Secretary reaffirms alliance commitment during visit to Philippines

US Defence Secretary reaffirms alliance commitment during visit to Philippines

U.S. Secretary of Defence Pete Hegseth reaffirmed Washington’s strong commitment to its alliance with the Philippines during his official visit to the Southeast Asian country on Friday.

Southeast Asia - Sat, March 29, 2025 | 3:32 pm GMT+7

Southern Vietnam province Tra Vinh okays five more wind power projects

Southern Vietnam province Tra Vinh okays five more wind power projects

Vietnam's southern coastal province of Tra Vinh has granted in-principle approvals for five wind power plant projects, with a total investment of over VND 13.8 trillion ($540 million).

Southeast Asia - Sat, March 29, 2025 | 3:29 pm GMT+7

Vietnam, South Africa eye stronger air logistics links

Vietnam, South Africa eye stronger air logistics links

Vietnam and South Africa are seeking to strengthen air logistics cooperation to meet rising trade and transportation demands.

Southeast Asia - Sat, March 29, 2025 | 3:24 pm GMT+7

Net profit of Vietnam-Singapore Industrial Park nearly doubles in 2024

Net profit of Vietnam-Singapore Industrial Park nearly doubles in 2024

Vietnam-Singapore Industrial Park J.V. Co., Ltd, or VSIP, the largest industrial park developer in Vietnam, posted VND3.28 trillion ($128.37 million) in net profit in 2024, up nearly 93% year-on-year.

Industrial real estate - Sat, March 29, 2025 | 3:18 pm GMT+7

Trump Organization eyes golf course, hotel projects in Vietnam

Trump Organization eyes golf course, hotel projects in Vietnam

A consortium between the Trump Organization and its partner in Vietnam plans multiple investments worth billions of dollars in golf courses, hotels and real estate projects Vietnam, Reuters quoted the consortium’s spokesman as saying.

Real Estate - Sat, March 29, 2025 | 11:06 am GMT+7

Livestock major Dabaco invests in 8.2-hectare dry port in northern Vietnam

Livestock major Dabaco invests in 8.2-hectare dry port in northern Vietnam

Vietnam’s leading livestock firm Dabaco has invested in an 8.2-hectare inland container depot (ICD) in Bac Ninh province, an emerging manufacturing hub in northern Vietnam and home to a Samsung Electronics plant.

Infrastructure - Sat, March 29, 2025 | 10:51 am GMT+7

Phuong Tien Minh appointed CEO of life insurer FWD Vietnam

Phuong Tien Minh appointed CEO of life insurer FWD Vietnam

Hong Kong-headquartered FWD Group Holdings Limited has appointed Phuong Tien Minh as CEO of life insurer FWD Vietnam, effective Thursday, March 27.

Finance - Sat, March 29, 2025 | 10:40 am GMT+7

Vietnam's Deputy PM backs formation of free trade zone in Binh Dinh province

Vietnam's Deputy PM backs formation of free trade zone in Binh Dinh province

Vietnam’s Deputy Prime Minister Nguyen Chi Dung on Friday expressed his support for an early study of a free trade zone in Phu My Port area, the south-central province of Binh Dinh.

Economy - Sat, March 29, 2025 | 8:25 am GMT+7

Vietnam offers numerous advantages for Skoda Auto's investment: executive

Vietnam offers numerous advantages for Skoda Auto's investment: executive

Vietnam offers a range of advantages for investment by Czech automaker Skoda Auto, including its seaport system, logistics infrastructure, and skilled labor, the company’s chairman and CEO Klaus Zellmer said on Thursday.

Industries - Fri, March 28, 2025 | 7:33 pm GMT+7

Vietnam plans to cut import tax for LNG to 2%

Vietnam plans to cut import tax for LNG to 2%

Vietnam’s Ministry of Finance is drafting a decree on preferential import tax for some products, including a proposal of 2% tax rate for LNG.

Energy - Fri, March 28, 2025 | 4:31 pm GMT+7

AES’s $2.1 bln LNG power project needs solutions to meet deadline: Vietnam authorities

AES’s $2.1 bln LNG power project needs solutions to meet deadline: Vietnam authorities

The 2,250-MW Son My 2 LNG-fired power project, invested by the U.S.'s AES and state-run Petrovietnam subsidiary PV Gas, “needs solutions” to meet its deadline.

Energy - Fri, March 28, 2025 | 4:06 pm GMT+7

Over $9 bln pledged for investment projects in central Vietnam province Binh Dinh

Over $9 bln pledged for investment projects in central Vietnam province Binh Dinh

Binh Dinh province on Friday handed over MoUs on investment cooperation, in-principle approvals and investment registration certificates to 62 projects worth over VND231 trillion ($9.03 billion).

Industries - Fri, March 28, 2025 | 4:05 pm GMT+7

Vietnam's giant Vingroup eyes mullti-billion-dollar renewable, LNG power projects

Vietnam's giant Vingroup eyes mullti-billion-dollar renewable, LNG power projects

Vietnam's leading private conglomerate Vingroup is seeking the government's permission to develop seven renewable energy projects worth $20-25 billion and a $5.5 billion LNG-fired power project from 2025-2030.

Energy - Fri, March 28, 2025 | 1:09 pm GMT+7

While the buzz around a market upgrade is back, who is this milestone for?

While the buzz around a market upgrade is back, who is this milestone for?

A key issue for the Vietnamese stock market is the underdevelopment of the institutional investor base. The dominance of retail investors can create heightened volatility, which, in turn, reduces the incentive for high-quality companies to list on the stock exchange, writes Gary Harron, head of securities services at HSBC Vietnam.

Consulting - Fri, March 28, 2025 | 10:31 am GMT+7