Vietnamnet.vn
Podcast
Vietnam has introduced several measures to ease costs for businesses and households. From November 1, the average retail electricity price fell 2% to VND2,159.9 (approximately $0.08) per kWh.
At the same time, the special consumption tax on all types of gasoline was reduced to zero, with the measure remaining in effect until March 31, 2027. The adjustment is estimated to have lowered domestic gasoline prices by VND1,575-1,804 ($0.06-0.07) per liter, depending on the grade.
Earlier, banks were instructed to reduce annual lending rates by 1.5-2 percentage points for production, business activities and priority sectors.
Lower business costs free up working capital
Speaking to VietNamNet, Doan Huu Tue, general director of My Viet International Group JSC, said electricity prices, fuel costs and lending rates all directly affect business operations.
When energy prices and borrowing costs decline, companies can save on both production expenses and financing costs.
Tue's company specializes in coffee processing and exports. Its production lines currently operate around the clock in three shifts to fulfill year-end export orders.
Despite having installed a rooftop solar power system, the company still spends approximately VND250 million ($9,500) per month on grid electricity.
A 2% reduction in electricity prices could save the company around VND5 million ($190) each month.
With outstanding loans totaling VND100 billion ($3.8 million), an actual interest rate reduction of 0.5 percentage points annually could save the business approximately VND500 million ($19,000) in interest payments each year, equivalent to nearly VND42 million ($1,600) per month.
Meanwhile, the company's transportation and logistics expenses amount to around VND1 billion ($38,000) monthly.
Savings in this area have yet to become apparent because freight rates typically respond more slowly to changes in fuel prices.
Combining the electricity and financing savings, the company could save an estimated VND47 million ($1,790) per month, or approximately VND564 million ($21,500) annually.
"When times are tough, every dong a business can save on input costs matters," Tue said.
He added that the savings could also be reinvested in improving product quality, depending on each company's needs and competitive pressures.
For heavily indebted businesses, even a small adjustment in lending rates can generate substantial savings. In electricity-intensive industries, lower power prices can have an even more noticeable impact on production costs.
At My Viet International Group, cheaper financing provides greater flexibility to increase working capital and purchase and stockpile raw materials for processing and export during the coffee harvest season, particularly when green coffee bean prices are low.
Timely access to credit also allows the company to secure supplies more proactively, helping maintain stable purchasing arrangements for coffee growers.
From a broader economic perspective, Tue believes sustained reductions in production costs could strengthen competitiveness, encourage investment and expand aggregate supply, creating additional room for economic growth without placing excessive pressure on inflation.
Lower energy prices ease pressure from construction sites to supermarkets
At the Bac Ai pumped-storage hydropower project in Khanh Hoa Province, Song Da 10 JSC consumes more than 1,000 liters of diesel daily to carry out construction work at the powerhouse area and part of the discharge tunnel.
At this level of consumption, fluctuations in fuel prices directly affect the cost of operating construction machinery.
Pham Quoc Huy, deputy director of the Song Da Project Management Board and site commander for Song Da 10 JSC, said the company had signed contracts with major suppliers to ensure a reliable diesel supply.
Throughout 20 months of construction, work at the site has never been interrupted by fuel shortages.
However, as fuel-related taxes have been reduced to zero and diesel prices have eased, the company has been able to achieve significant cost savings.
In the retail sector, lower energy prices are also helping contain upward pressure on consumer goods.
A representative of WinMart said logistics and supply chain costs remain under pressure, prompting some suppliers to propose price increases.
However, the supermarket chain carefully examines the reasons and scale of each proposed adjustment, recognizing that higher input costs ultimately affect consumers.
Leveraging their scale, WinMart and WinMart+ actively negotiate with suppliers, secure product supplies and streamline operating expenses to maintain stable retail prices.
According to the company representative, lower electricity and fuel prices are also helping ease inflationary pressure amid continued market volatility.
The retailer expects these policies, combined with business efforts and favorable market developments, to support price stability and consumer purchasing power during the final months of the year.
Since the beginning of the year, resources allocated to fuel-related tax and fee reductions have exceeded VND64 trillion ($2.4 billion).
For the final two months of the year alone, the fiscal resources required to reduce the special consumption tax on gasoline to zero are estimated at approximately VND4 trillion ($152 million).
According to Nguyen Tien Thoa, the reduction in the special consumption tax immediately brought gasoline prices down by VND1,575-1,804 ($0.06-0.07) per liter, depending on the grade.
This has helped households reduce transportation expenses while allowing businesses to save on fuel and gain more flexibility to maintain stable product prices.
Nevertheless, stronger year-end consumer demand, fluctuations in global energy prices and exchange rate movements could still exert upward pressure on prices.
Against this backdrop, Thoa said lower electricity prices have a direct impact on the consumer price index (CPI), while cheaper gasoline helps limit increases in production and distribution costs.
Sharing this view, Ngo Tri Long of the Vietnam Financial Consulting Association said reductions in electricity and gasoline prices support economic growth, particularly as the room to contain inflation becomes increasingly limited toward the end of the year.
Effective energy price management, he argued, can ease pressure on the overall price level and create additional flexibility for achieving macroeconomic objectives.
Electricity and petroleum products are essential inputs across the economy. Lower energy costs enable businesses to reduce expenses, potentially lower production costs and improve competitiveness as Vietnam becomes more deeply integrated into international markets.
From a social welfare perspective, Long said these policies also ease household spending burdens and help contain increases in the prices of goods and services, providing relief to both consumers and businesses.
Electricity price cuts offer savings across key industries
According to calculations by Nguyen Tien Thoa, chairman of the Vietnam Valuation Association, a 2% reduction in electricity prices could lower production costs by approximately 0.12% in the steel industry, 0.3% in cement manufacturing and 0.2% in textiles and garments.
These savings give businesses more flexibility when considering selling prices, although they continue to face pressure from other input costs.
On the credit side, banks have been instructed to reduce annual lending rates by 1.5-2 percentage points for production, business activities and priority sectors.
For individual businesses, however, the actual impact on cash flow depends on the interest rates they ultimately receive and their ability to access financing when working capital is needed most.
Tam An
.svg){kind=icon}
