Fuel market management still has administrative nature
At the seminar "To develop a stable, transparent, and efficient fuel market" on the morning of July 30, National Assembly Delegate Hoàng Văn Cường - Member of the National Assembly's Finance and Budget Committee said, fuel prices are managed using tools, including base prices, tax adjustments (reducing taxes when necessary), and adjustments to the stabilization fund.
Mr. Cường stated that the drawback of this mechanism is that prices must follow the global market; if import prices are high, domestic prices will be high. The management still has an administrative tool nature, with the State imposing prices on fuel trading enterprises.
This leads to periods when the management mechanism does not ensure benefits and profits for enterprises, especially distribution and retail fuel businesses. There are phases when price fluctuations occur, and no tools intervene, causing businesses to suffer losses and close down.
Therefore, Mr. Cường suggested that future policy development should aim to shift from an administrative imposition mechanism to market tools for self-regulation, fostering competition among fuel trading enterprises.
"The current management mechanism is using State administrative management, so it should shift to market tools, allowing the market to regulate. Currently, we have the basis to use market tools without worrying about passivity because domestically produced fuel has a significant source (accounting for 70%). I believe that allowing market competition is the overarching factor.
To have market tools for competition, we must have a competitive market; to have a competitive market, buying and selling must be market-determined, with a hundred sellers and ten thousand buyers,” Prof. Hoàng Văn Cường stated.
Equal competition is also the desire of many fuel trading enterprises in recent times.
Speaking with Lao Động, a fuel distributor said that fuel trading enterprises do not have equal conditions to compete fairly in the market. Especially in the relationship between primary traders, distributors, and retailers; between large, super-large enterprises dominating the market and small and medium enterprises.
For instance, a corporation holds up to 51% of the market share, and along with 6/32 other large enterprises, holds up to 88% of the market share. However, the draft Decree on fuel trading is being developed in a way that disadvantages and eliminates the fair and equal competition capability of small enterprises.
Moreover, despite the market dominance, the draft allows that enterprise full authority to decide wholesale and retail prices within its distribution system. This is not consistent with the Competition Law.
When there is price competition, consumers will benefit
Chairman of the Vietnam Petroleum Association Bùi Ngọc Bảo stated that fuel is a highly sensitive commodity, and the Government has been concerned about it for the past 20 years.
We see that starting from 2003 with the first decision being Decision 187 on organizing fuel trading. Since then, we have promptly built 5 decrees to complete the management mechanism for organizing fuel trading.
He stated that global fuel prices account for 64-72% of the price structure, leading to domestic prices being entirely dependent on international prices. This commodity does not fully adhere to the pure supply and demand laws and does not detach from international prices.
However, according to Mr. Bảo's assessment, the current fuel management mechanism is administrative, especially regarding prices. Because currently, it is "too strictly regulated" when introducing a 7-day management mechanism, and state management agencies are regulating on behalf of enterprises.
"For state management, in the future, it is necessary to ensure energy security and supply for this economy, and let the market operate. When there is competition, consumers will always benefit," Mr. Bảo said.
Mr. Phạm Văn Bình - Deputy Director of the Price Management Department (Ministry of Finance) said that the Ministry of Industry and Trade is being assigned by the Government to lead the development of a decree to replace the current fuel decree.
"The content of the decree is being studied, and we hope there will be changes in fuel trading activities, aiming towards fuel trading activities suitable for current conditions," Mr. Bình said.
