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Petrol price slashed by another VND 1,000 to VND 11,000 per litre   2008-12-10 - VietNamNet, Tuoi tre, Dan tri

The Ministries of Finance, and Industry and Trade have decided to set the new retail petrol price at VND 11,000 a litre, effective December 10, or VND 1,000 lower than the previous price which has been applied for the last week.


Under the latest decision, the A92 petrol, the most popular kind of petrol, will be sold per litre at VND 11,000 instead of VND 12,000. Similarly, A95 petrol price has been lowered to VND 11,500 per litre.


Diesel and kerosene will also have the same price decrease of VND 1,000, which means that 0.05S diesel will also have the price at VND 11,000 per litre, while kerosene will be at VND 12,000 per litre.


Together with the decision to allowing the retail petrol price decrease, the Ministry of Finance has decided to raise the import tax on petrol and oil to 40% from 35%, the ceiling import tax rate under the current regulations.


With the new tax rate, the state budget will collect VND 210 per litre more from the tax. It is estimated that every day, Vietnam consumes 12 million litres of petrol, and therefore, the budget will have VND 2.5 billion more earned each day from petrol.


The decision on petrol price slashing has been made amid the oil price decreases in the world’s market with the oil price now hovering at US $40 a barrel.


The crude oil price with delivery in January 2009 at 9:00am of December 10, Hanoi time, saw the increase of US 0.77 (1.8%) over the previously New York closing price to US $42.84 a barrel.


The oil price has bounced back after experts believe that OPEC will decide to cut down the oil output sharply at the organization’s meeting in Algeria next week.


Last week, the oil price once dropped below $40, continuing the downward trend, which has made people think that petrol importers have been making heavy profits. With the current petrol import price, the retail price should be VND 8,000-9,000 per litre only after tax and fees, while petrol importers had still sold at VND 12,000 per litre until the decision on slashing petrol prices was released this afternoon.


Before the decision on the petrol price decrease was made, economists had urged to lower petrol prices, affirming that this is the best way to stimulate the demand.


Ngo Tri Long, former Deputy Head of the Market and Pricing Research Institute, said that the petrol price is the input material for many products, therefore, the most effective measure to stimulate the demand is lowering the price on gasoline.


“The petrol price decrease will help businesses reduce the production costs, make their products competitive with Chinese and foreign products which are forecasted to flock into Vietnam in 2009,” Long said.


Meanwhile, Associate Professor Do Duc Dinh, Director of the Vietnam Socio-Economic Research Centre, thought that Vietnam should not raise the tax to 40%. He said that even the 35% tax rate is considered high. Other countries only impose 25%, while the US only imposes 12%.


Dinh said that the tax rates should be raised on luxury products, while it is necessary to lower the tax rates on the products which are the input materials of many products, in order to stimulate the demand.

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