Hanoi - Vietnam will continue controlling gasoline prices
and compensating retailers for their losses, postponing a decision in
March to cease government payments and decontrol prices, a senior
government official confirmed Thursday.
But the official refused to call the government payments
'subsidies.'
'We don't subsidize prices,' said Deputy Trade Minister Nguyen Cam
Thu. 'The government doesn't use the term 'subsidize'. We will
compensate basis prices for enterprises so that enterprises can keep
the prices at the levels that the government wants.'
Thu said the continuation of price ceilings was a temporary
measure to cope with rapid global energy price rises, which have
helped drive inflation rates in Vietnam to 20 per cent or more.
In an interview with the newspaper Tuoi Tre, Deputy Prime Minister
Nguyen Sinh Hung said the continued price controls were an effort to
tame inflation.
'If we allowed domestic petrol and oil prices to go up to close to
world levels, prices of goods and services would increase,' Hung
said. 'We are giving priority to containing inflation, so we cannot
allow the prices follow the market for a certain period of time.'
Vietnam is a significant exporter of crude oil, but must import
all of its refined petroleum products until its first refinery, at
Dung Quat, comes online in 2009. The government has traditionally set
the price retailers can charge for gasoline at the pump and has
compensated them when low prices force them to operate at a loss.
Last year the government spent some 500 million dollars to
compensate petroleum vendors for their losses, and this year the
payments are costing the government over 60 million dollars per
month.
On March 22, Prime Minister Nguyen Tan Dung announced the
government would begin implementing a longstanding plan to eliminate
subsidies and decontrol gasoline prices. The decision to delay
implementation runs counter to Dung's frequent calls for Vietnam to
move faster towards a more market-driven and less state-controlled
economy.
The Trade Ministry's Thu said it was impossible to say how long
the payments, which the government does not call 'subsidies,' would
continue.
'How long we will freeze the implementation (of eliminating
subsidies) depends on the detailed developments of the market,' Thu
said. 'We cannot say what we don't know. If tomorrow is not good but
is more complicated, we will have to wait. If tomorrow is normal, we
will consider what is better.'
USA
Your Talkback on this Story