Vietnam should consider stocking up on oil and slashing crude oil pumping due to diving oil prices on global markets, HCMC Chairman Le Hoang Quan told the Government’s web conference on December 29.

With the world’s oil price plunging to US$52 per barrel on December 29 morning and gold prices surging, Quan proposed the Government allow buying oil for stockpiling and reducing oil extractions and exports.

However, a number of economic experts raised concerns over Quan’s proposal, saying it is better to increase foreign reserves.

Economic expert Vu Dinh Anh cast doubt on the HCMC chairman’s proposal, saying increasing foreign reserves is better than buying oil for storage.

On the other hand, Vietnam exports part of its crude oil output and imports almost all fuel needs, Anh said.

The expert also noted that related issues should be considered carefully before deciding to increase oil reserves and reduce the pumping of oil.

Another expert, Le Dang Doanh, also shared Anh’s view, saying foreign reserves play an indispensable part in ensuring sustainable economic growth. Therefore, Doanh suggested the Government establish an independent research group to weigh Quan’s proposal.

This year’s foreign reserves are forecast to reach a record high of more than US$35 billion, well above the US$7 billion recorded in 2011, according to Governor of the State Bank of Vietnam (SBV) Nguyen Van Binh.

Figures given at the conference showed the country has extracted 15.5 million tons of crude oil this year, a year-on-year rise of 1.8%, and exported nearly 9.1 million tons, up 8.9% against last year.

A plan to cut oil pumping next year has been passed by the National Assembly (NA). Accordingly, Vietnam National Oil and Gas Group (PVN) will reduce this year’s output from 14.32 million tons to 13.84 million tons. But PVN has increased output to 16.42 million tons and has yet to plan a downward revision.

Minister of Industry and Trade Vu Huy Hoang said earlier that the ministry had ordered PVN to come up with solutions to adapt to oil price developments including raising oil reserves to 50-55 million tons.

Vietnam may suffer lost revenues if the country exports oil with a production cost of US$30-70 per barrel.

The Ministry of Planning and Investment projected gross domestic product (GDP) growth would slow by 0.8 to 1.2 percentage points if oil extractions plummet by 30%.

The country’s export price of crude oil was US$112.4 a barrel in August. The latest statistics have yet to come out although the global oil price dropped below US$55 a barrel last Friday.

Vietnam annually earns US$10 billion on average from crude exports, accounting for 11% of total budget collections.

This year’s economic climate has witnessed growing exports and foreign direct investment (FDI) and a recovery of domestic production.

Minister of Planning and Investment Bui Quang Vinh told the conference that this year’s total development investments have exceeded VND1,220 trillion, rising 11.5% versus last year and equivalent to 31% of GDP.

Disbursements of official development assistance (ODA) and preferential loans have reached approximately US$5.5 billion for the whole year, the minister added.

However, the minister also pointed out a number of shortcomings, including slow economic restructuring, high public debt, weak key and supporting industries, obstacles to companies’ operations, natural disasters and pollution.

Speaking at the web conference, Prime Minister Nguyen Tan Dung said the national economy remains stable despite the world’s unpredictable political and economic factors.

However, the Prime Minister said macroeconomic development has not been sustainable.