Vietnam will grant importers the right to set domestic retail fuel prices, a state-run newspaper said on Saturday, a move likely to see higher pump prices. The decree, expected to take effect in May, could in the 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 (People) newspaper reported.
"As the curb is removed, prices are likely to rise and so consumer prices may be higher," said a market analyst with a local securities firm. The government decree, signed on Friday, has cancelled a plan to raise domestic retail petrol prices by 500 dong (3 US cents) per litre scheduled for Friday, the online VNExpress newspaper (www.vnexpress.net) said.
The Finance Ministry had forecast April's consumer prices would be 0.25 percent above those of March. Petrol made up 3 percent of the price basket used to calculate inflation.
The finance ministry aims to keep Vietnam's inflation this year at between 7 percent and 7.5 percent, lower than the country's economic growth target of 8.5 percent. 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.
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