Petroleum retail firms in HCM City have lodged another complaint to the Ministries of Finance, Industry and Trade and HCM City People’s Committee about problems they are facing.

They said they still have not received the expected support from state management agencies as they have fallen into crisis. Many retailers have temporarily closed their doors, despite the risk that state management agencies may send inspectors at any time and impose punishments. 

If the current situation lasts a long time, they may go bankrupt and the petrol supply in the market will be seriously affected.

The retailers have proposed changes in the commission policy. They want a VND700 per liter discount to break even, VND1,000 per liter to cover expenses, and more than VND1,000 to make a profit. Enterprises bear many expenses, including taxes, retail rents, transport costs, losses in transit, payment to workers, social insurance premiums for workers, expenses on fire fighting and prevention, and depreciation costs. 

They have also asked for a price adjustment mechanism to allows timely adjustment of prices in accordance with market rules.

At a meeting with managers of leading petroleum distribution firms in HCM City on September 15, Bui Ta Hoang Vu, director of the HCM City Department of Industry and Trade, said the fluctuations in the world market have caused problems not only in output but also in pricing management.

Vu admitted that many retail firms are facing difficulties with revenue not high enough to cover expenses. However, they were asked to maintain operations and sales to ensure sufficient supply, though the more they sell, the biggest losses they will occur.

Under current laws, the Ministries of Finance and Industry and Trade have the power to make policy adjustments, while local departments only have the function of granting licenses to businesses. Therefore, the HCM City Industry and Trade Department will forward the proposals of petroleum retail companies to central agencies. 

The department stressed that if the current situation does not improve, retailers will not be able to hold out.

There are about 550 filling stations in HCM City, 15 businessmen registering import-export activities, 60 businessmen registering distribution activities, one general agent and 29 agents. 

Two out of 550 filling stations have suspended operation for 15-30 days, saying they need repair. With the other stations maintaining operation, petroleum supply in HCM City is still sufficient.

Meanwhile, in Dong Thap province, 10 out of 549 filling stations have asked for a temporary stop of operation. The figure is 10 out of 320 filling stations in Vinh Long. In Hau Giang and Ben Tre, some filling stations have stopped sales, saying that they had incurred big losses.

Meanwhile, local authorities have not approved the request to temporarily stop sales of petroleum products, saying that petrol is a strategic product and all business facilities have to accept risks, and make profits and take losses at different times. 

They need to understand the current difficult situation and maintain business activities to overcome difficulties.

However, some state officials argue that it is unfair to ask businessmen to continue selling petroleum products despite losses. They said the price management mechanism applied by ministries needs to be more flexible. 

It would be better to ask distributors to make price adjustments within a certain margin so that retailers can change retail prices and commission policies when prices in the world market fluctuate. 

Tax adjustments

If petrol prices in the world market continue increasing to over $100 per barrel, adjusting tax will be necessary to help cool down the prices.

As petroleum prices have increased, affecting the prices of other goods and threatening to cause high inflation, some experts believe that it is necessary to further cut taxes, including the luxury tax and VAT, in addition to reducing the environmental protection tax to the lowest rate.

On September 15, at a press conference announcing the organization of the Vietnam 2022 Socio-Economic Forum, Chair of the National Assembly’s Economics Committee Vu Hong Thanh said the National Assembly Standing Committee has issued a resolution on reducing the environmental protection tax to help reduce domestic petroleum prices.

According to Thanh, the CPI grew by 2.58 percent in the first eight months of the year compared with the same period last year. But if goods prices cannot be controlled well, especially petrol prices, the goal of curbing inflation at below 4 percent would be challenging. The National Assembly’s Standing Committee has also asked the government to check other taxes.

Tran Thuong