The “unexpected” increase in gasoline prices is having a direct impact on the resilience of businesses in the transportation and logistics industries. As for manufacturing and exporting enterprises, there is a risk of breaking or losing capital when gasoline prices push up logistics and raw material costs.

Transport enterprises are dying, production is at risk of capital loss

Only operating for a few months in the “new normal” state, the passenger transport business has not yet recovered its form, the number of passengers has had to face the peak of gasoline prices in 8 years.

Currently, the price of gasoline is fluctuating from 25,532 to 26,287 VND/liter, an increase of 52-56% compared to the same period in 2021. Similarly, the price of oil also increased by 42-64%, ranging from 17,932 to 20,801 VND/liter, kg. This price is once again challenging the endurance of businesses.

Specifically, at this time, a Ford 16-seat car with 70 liters of diesel fuel needs nearly 1.5 million VND, while in the same period in 2021, this amount is just over 900,000 VND.

Mr. Doan The Xuyen, Director of Phuc Xuyen Co., Ltd. said that the higher the price of gasoline, the more the business loses because this item accounts for 40% of the cost of each trip.

“Although the business runs through Tet, except on the 1st, the number of passengers is very small because COVID-19 continues to be complicated, the number of infections increases rapidly. Currently, the operating capacity of the fleet is only 50%, There are even many trains that only “carry the wind”.

Although there is no profit or even loss, we still try to hold out so that customers know the garage is still operating,” said Xuyen.

Gasoline prices are galloping, but in the context of the COVID-19 epidemic, one meter of land, three garages, raising ticket prices at this time will be a difficult problem for passenger transport businesses like Phuc Xuyen. The source of income is limited while the business still has to bear the costs of vehicle maintenance, parking, staff salaries every month…

Transport enterprises have not yet recovered and have encountered a petrol price shock. (Photo: VNA)

Although not directly affected like transport and logistics enterprises, the increase in gasoline prices also causes textile and garment export companies to suffer significant losses.

Sharing about this, Mr. Pham Van Viet, General Director of Viet Thang Jean Co., Ltd (VitaJean) said that the increase in petrol prices affects export costs and import prices of raw materials.

“Right before Tet, businesses signed contracts until September and finished product prices. When negotiating contracts, VitaJean took into account factors such as gasoline prices, labor, raw materials… but The increase in gasoline prices was unexpected.

This means we have the risk of losing or breaking even with these orders,” Mr. Viet said.

Currently, the cost of transportation to the US is 20,000 USD/container, to Europe ranges from 17,000 to 18,000 USD/container. VitaJean’s representative is concerned that the continued escalation of crude oil prices in the world may push logistics costs to establish a new price level in March or April, eroding the profits of businesses.

Can tax cuts lower fuel prices?

Thus, the shocking increase in gasoline prices is hindering the recovery and growth of transport and production enterprises, especially in the context of Vietnam’s economy opening up and adapting to COVID-19.

In this situation, many experts believe that it is necessary to consider tax tools to cool down gasoline prices and “relieve pain” for businesses.

Talking to Tien Phong newspaper, economist Ngo Tri Long said that the petrol price of a country depends on the world price and the financial policy of each country (tax).

However, in Vietnam, each liter of petrol sold to the market “pigs” 4 types of taxes, especially the environmental tax, up to 4,000 VND/liter for gasoline and 2,000 VND/liter, kg for oil.

“When the world gasoline price increases, Vietnam has two valves to reduce the price, namely tax and the Petroleum Price Stabilization Fund. However, the Stabilization Fund does not discuss anymore because of negative preparation.

The Ministry of Finance is saying that Vietnam’s gasoline tax is not high, lower than many countries, but many think that it still needs to be reduced. Personally, I find the tax on environmental protection is currently high. Should this tax rate be reconsidered?” Mr. Long said.

Many experts recommend lowering gasoline tax to reduce pain for businesses. (Photo: VNA)

In this regard, Mr. Tran Duy Dong, Director of the Domestic Market Department (Ministry of Industry and Trade) said that if gasoline prices continue to escalate, assuming crude oil prices exceed 100 USD/barrel, in addition to using tools Price stabilization fund, the Ministry may consider another tool, which is taxes and fees.

“If gasoline prices are too high, it will disable some tools and policies being implemented in the Economic Recovery Program, including a 2% VAT reduction,” said Mr. Dong.

Updated to the time of 19:42 on February 24, Brent oil price increased by 8.4% to 104.99 USD/barrel, after touching 105.79 USD/barrel. This is the first time this oil price has surpassed the threshold of 105 USD/barrel since 2014. The price of US light sweet crude (WTI) also increased by 8% ($7.33) to 99.43 USD/barrel.

Thus, the scenario where the world oil price exceeds 100 USD/barrel has become a reality after political tensions between Russia and Ukraine. Economist Dinh Trong Thinh forecasts that with this development, domestic gasoline prices in the upcoming operating period (1/3) will continue to escalate, breaking new peaks.

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