The document to the Prime Minister, addressing issues related to the amendment of the decree on petroleum business, has been opened by the Ministry of Industry and Trade (MOIT), the compiler, to collect opinions from related parties. 

The new decree, once it takes effect, will replace Decree 83/2014, Decree 95/2021, and Decree 80/2023.

The petrol businesses believe that the latest draft decree shows discriminatory treatment toward petroleum companies, offering advantages to large exclusive enterprises, which will lead to the creation of interest groups, pave the way for wrongdoings to arise, and restrict business rights of small companies.

Regarding petroleum price management, the draft decree maintains the pricing method, under which retail prices will be determined by administrative order rather than market supply-demand conditions, though input prices fluctuate all the time depending on world events. 

The pricing scheme is contrary to the rules of the market economy and doesn’t observe the principle of transparency and competition. 

The businesspeople also complained that the collection of opinions about the draft decree is just being carried out as a formality, and the process doesn’t strictly follow the steps stipulated in the Law on the Promulgation of Legal Documents.

“We note that many issues still exist and remain unchanged in the latest draft version, even though they face criticism and need amendments,” the document said. “If the unreasonable drafted regulations are applied in reality, the goals of renovating the petroleum distribution market management and creating positive influences to the market will be unattainable."

Many other problems in the draft decree have also been found.

Currently, domestic production can satisfy part of the total domestic petroleum demand. However, regulations say that only the 'focal' merchants can buy petroleum from domestic manufacturers, while distributors cannot. The stipulation is believed to be unreasonable in current conditions.

While focal merchants are allowed to buy or sell petroleum products, each distributor must buy petroleum from only one source and are not allowed to trade between each other.

With the regulations on business rights as shown in the draft decree, the enterprises which are focal merchants will become the leaders in the market, while other enterprises will be distributors and retailers, who will have to rely on focal merchants or have to work for focal merchants.

The 2024 Law on Competition clearly stipulates that enterprises holding 30 percent of market share or more, and/or five enterprises together holding 85 percent of market share or more, are considered market dominant enterprises.

Over many years, there has always been a super-large enterprise holding 51 percent of market share. It has all business rights of a focal merchant, a large network of distribution, and undertakes all the works of the supply chain, from import to wholesale to retail to consumers.

In addition, there are six large corporations which are focal merchants, holding 88 percent of market share.

As such, Vietnam doesn’t have a real petroleum market in the true sense, with free competition, fairness and equality, according to the businesspeople.

They also stressed that if the scheme continues, under which the rights to fix prices and allocate discount rates to certain enterprises, there won’t be competition in the market, because focal enterprises will maintain dominance. 

The businesspeople have called on the government and ministries to amend the draft decree by reforming the petroleum market management method, in order to build a petroleum market that operates under the principle of fairness, competition and equality.

They have proposed that the government apply solutions to ease monopoly and market dominance held by large and super-large enterprises, and help SMEs (small and medium enterprises) in distribution and retail avoid the risk of being swallowed up by large enterprises. All these are the goals and the spirit of the Law on Supporting SMEs.

The businesspeople believe it would be better to remove regulations on the classification of petrol businesspeople. Instead, it is necessary to clearly stipulate that the subjects covered by the decree are petroleum enterprises in general which can satisfy technical requirements.

Also, they said that it would be better to remove the petroleum price stabilization fund, because it is ineffective. 

Tam An