Vietnam considers abolishing oil price stabilisation fund

The Ministry of Finance has put forward a proposal to abandon the petrol and oil price stabilisation fund in the pricing bill (revised) and is currently gathering public opinions on the matter.

Domestic retail petrol prices hit an all-time high of more than VND32,000/litre on June 13

The petrol and oil price stabilisation fund has been established in order to support the regulation of domestic petrol and oil prices amidst fluctuations in the global oil market.

However, skyrocketing oil prices in the global market over recent months have fueled the retail price of both petrol and oil in Vietnam, with forcing State management agencies to make use of the price stabilisation fund to intervene.

By the end of the year’s first quarter the fund had slipped into a deficit of nearly VND170 billion. 

In its proposal, the Ministry of Finance stated that the abolition of the fund would potentially be done in order to help petrol prices be fully regulated in line with the market law of supply and demand.

Dr Bui Trinh, an economic expert, told thanhnien.vn that State management agencies should seek to examine the impact of the petrol price stabilisation fund since its inception before drawing any conclusions.

Dr. Trinh voiced his support for the common view held by other experts that the Government should consider removing the excise tax and environmental protection tax as it seeks to reduce current petrol prices, helping curb inflation and facilitate economic recovery.

Meanwhile, Dr Vu Dinh Anh, economic expert, suggested that the Government move to further reduce the excise tax, value-added tax, and environmental protection tax placed on petroleum.

“Taxes account for nearly 40% of the retail price of every litre of petrol, which is quite high. Therefore, the most suitable solution to lower fuel prices is to regulate and reduce taxes,” he said.

Domestic retail petrol prices hit an all-time high of over VND32,000 per litre on June 13 following an increase of nearly VND1,000 per litre.

VOV