The latest hike in domestic fuel prices has surprised and dismayed many businesses and experts.

Do Quoc Binh, chairman of the Ha Noi Taxi Association, called the hikes "stunning and unbelievable."

He said the higher fuel prices would have an enormous impact on people and businesses in general and taxi drivers in particular.

"Taxi drivers are already suffering income losses of about VND50,000 per day, or VND1.5 million per month, which is a huge amount for them," Binh said.

He said the Ha Noi Taxi Association held a meeting yesterday to address taxi fare adjustments.

He said at the price of VND22,900 per litre of A92 petrol, taxi fares would rise up by VND1,500-2,000 per kilometre.

Nguyen Tien Nghi, vice chairman of the Viet Nam Steel Association, said the steel industry would face even more difficulties because of the increase in petrol prices.

With the price of mazut going up by VND2,000 per kilo, the cost of producing each tonne of steel would go up by about VND80,000, not to mention the impacts of hikes in diesel prices, he said.

However, in the current "quiet" market situation, raising the price of steel was "just impossible," he said.

"Besides, bank interest rates are still high, and a combination of all these factors could push many steel businesses to the edge of bankruptcy", Nghi said.

Nguyen Manh Hung, chairman of the Viet Nam Automobile Transportation Association, said a 5 per cent increase in diesel prices would make transportation costs rise by 2.2 per cent.

However, it's now difficult for cargo transport businesses to raise their fares as many contracts had been signed before the increase in petrol prices, Hung said.

Economist Ngo Tri Long said the rise in fuel prices was unavoidable, but felt the level of increase was unreasonable. A gradual price hike would have been better, he said.

Long said the hike would make the target of keeping inflation under two digits this year difficult to achieve.

Nguyen Minh Phong of the Ha Noi Socio-Economic Development Research Institute, said, "I anticipate inflation to get worse within this month."

It's obvious that the increase in petrol prices would lead to increases in the prices of many goods and services very soon, worsening inflation, he said.

The ministries of Finance and Industry and Trade have asked relevant agencies to tighten inspection and controls on the market to prevent unreasonable increases in the prices of goods and services prices, and to encourage fuel saving in production and consumption.

Effective Wednesday, the prices of petrol and kerosene rose byVND2,100 and VND600-2,000 per litre respectively.

Announcing the increase, the Ministry of Finance also said it had lowered the import tax on petrol and oil from the current 4 per cent to 0 per cent.

In addition, contributions to the petrol price stabilisation fund has been reduced from VND1,400 to VND300 per litre for petrol, VND1,240 to VND300 per litre for diesel, from VND780 to VND300 per litre for kerosene and from VND1,610 to VND300 per litre for mazut.

Transporters raise charges on higher fuel costs

A large number of HCMC-based goods and passenger transport firms are preparing to increase their charges following the shocking fuel price hike on Wednesday.

With gasoline and diesel oil increasing by VND2,100 and VND1,000 per liter to VND22,900 and VND21,400 respectively, the firms are calculating a transport charge hike to make up for the increased fuel costs.

Trinh Chau Khanh, director of Kim Loi Minh Transport Co., told the Daily that fuel costs account for 45-50% of transport fees. If enterprises keep the charges unchanged, they cannot ensure profitability, he said.

Khanh said transport firms would hold negotiations with goods owners to reach agreement on fee increases but he refused to reveal when the new charges apply, although it was likely to be within the next few days.

Similarly, Nguyen Ngoc Dan, director of Hai Duong Transport Delivery Co. Ltd., said the firm’s transport charges will be increased 10%, exactly the percentage of the latest fuel price rise.

He added his company had lost numerous customers due to the fuel price volatility last year. To avoid such a situation, the firm will not increase their charges for a week.

The fuel price hike has also forced taxi service providers to charge higher fares. Truong Quang Man, deputy general director of Mai Linh Taxi, said his company will revise up fares by 6%.

Meanwhile, passenger transport enterprises at Mien Dong Coach Station are still applying the old charges. Thuong Thanh Hai, deputy director of the coach station, said a charge hike may occur in a week, with the increase lower than 10%.

Transporters are required to write to the HCMC Department of Transport and the Department of Finance before they can adjust up their transport fees.

Ta Long Hy, chairman of the HCMC Taxi Association, told Nguoi Lao Dong newspaper that taxi fares would definitely rise next week after being restrained for several months, while enterprises are struggling with rising labor costs and high bank interest rates.

Luong Hoang Trung, vice chairman of the HCMC Goods Transport Association, said the association is weighing new transport fees which will be applied in the near future.

A representative of Phuong Trang Tourist & Transportation Company said the firm is considering a 5-12% increase for 15 routes, including ten to the Mekong Delta and five to the central region. HCMC-Dalat and HCMC-Nha Trang routes, however, will remain unchanged.

Import tax zeroed out

The Ministry of Finance has decided to scrap import taxes on some kinds of diesel oil in a bid to lessen pressures on dealers, who claim they have been losing about VND1,000 per litre on fuel oil sold.

Under circular 39/2012/TT-BTC, which takes effect today, the import tax of 3 per cent on diesel will be removed.

Meanwhile, the Ministry said leaded and unleaded petrol would continue to attract a zero tax rate, as would kerosene for aircraft.

A tax of 5 per cent will continue to be applied on lubricants, while distilled oil and oil for machines will still attract an import duty of 15-20 per cent.

VNS/VIR