Vietnam floats retail fuel prices
Tuesday, April 10, 2007
VIETNAM will grant importers the right to set domestic retail fuel prices, a state-run newspaper said, a move likely to see higher pump prices.
The decree, expected to take effect in May, could in longer term lift Vietnam's consumer prices, while boosting shares in fuel trading firms that had seen profits suffer when they couldn't pass on higher costs of oil product imports.
Nguyen Tien Thoa, head of the Finance Ministry-run Price Management Department, said lifting the state-set prices meant the government stops interfering with the market, the ruling Communist Party-run Nhan Dan newspaper reported.
"As the curb is removed, prices are likely to rise and so consumer prices may be higher," said a market analyst.
The government decree, signed on Friday, has cancelled a plan to raise domestic retail petrol prices by 500 dong (US$0.03) per litre scheduled for Friday, the online VNExpress newspaper said.
The Finance Ministry had forecast April's consumer prices would be 0.25 per cent above those of March. Petrol made up three per cent of the price basket used to calculate inflation.
The finance ministry aims to keep Vietnam's inflation this year at between seven per cent and 7.5 per cent, lower than the country's economic growth target of 8.5 per cent.
On the country's stock market, investors could start looking into shares of fuel trading firms, a broker in Hanoi said.
"So far the interest is thin as there has been too much control over petrol enterprises, but with this decision in place, their share prices would rise," he said.
Shares in Saigon Fuel Co and Materials Petroleum Co are listed on the Ho Chi Minh City Securities Trading Centre, the country's main stock market.
Vietnam, which joined the World Trade Organisation in January, adjusts prices and import tariffs on the back of world crude price movements, but the changes often come late, causing losses to state-run importers. The country lacks major refineries for its crude oil and relies heavily on import. Reuters
The decree, expected to take effect in May, could in longer term lift Vietnam's consumer prices, while boosting shares in fuel trading firms that had seen profits suffer when they couldn't pass on higher costs of oil product imports.
Nguyen Tien Thoa, head of the Finance Ministry-run Price Management Department, said lifting the state-set prices meant the government stops interfering with the market, the ruling Communist Party-run Nhan Dan newspaper reported.
"As the curb is removed, prices are likely to rise and so consumer prices may be higher," said a market analyst.
The government decree, signed on Friday, has cancelled a plan to raise domestic retail petrol prices by 500 dong (US$0.03) per litre scheduled for Friday, the online VNExpress newspaper said.
The Finance Ministry had forecast April's consumer prices would be 0.25 per cent above those of March. Petrol made up three per cent of the price basket used to calculate inflation.
The finance ministry aims to keep Vietnam's inflation this year at between seven per cent and 7.5 per cent, lower than the country's economic growth target of 8.5 per cent.
On the country's stock market, investors could start looking into shares of fuel trading firms, a broker in Hanoi said.
"So far the interest is thin as there has been too much control over petrol enterprises, but with this decision in place, their share prices would rise," he said.
Shares in Saigon Fuel Co and Materials Petroleum Co are listed on the Ho Chi Minh City Securities Trading Centre, the country's main stock market.
Vietnam, which joined the World Trade Organisation in January, adjusts prices and import tariffs on the back of world crude price movements, but the changes often come late, causing losses to state-run importers. The country lacks major refineries for its crude oil and relies heavily on import. Reuters
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