Brian Jeffrey
After the Ministry of Industry and Trade (MOIT) drafted a decree on petroleum trade management, the Vietnam Chamber of Commerce and Industry (VCCI) provided feedback, specifically addressing regulations on petroleum pricing, business conditions, and storage.
MOIT’s concern revolves around the potential for indirect trading among distributors leading to price inflation. They advocate banning this practice to prevent artificial price increases.
VCCI opposes this perspective, arguing that restricting distributors’ ability to trade with each other goes against market principles that allow members to optimize their business operations by choosing trading partners.
Market dynamics typically drive businesses to seek lower-priced suppliers. VCCI emphasizes that market forces would naturally eliminate high-priced sellers, ensuring fair competition.
Prior regulations mandated a 1:1 distribution model, constraining retailers to single distributors. However, recent updates permit retailers to source products from various distributors, fostering market competition and profit optimization.
MOIT supporters argue that permitting distributors to trade could lead to inaccurate petroleum reserve reporting, impacting macroeconomic management.
VCCI counters this by noting that the responsibility for product circulation reserves does not fall on distributors, suggesting amendments to allow inter-distributor trading.
The Vietnam Petroleum Association Chair, Bui Ngoc Bao, emphasizes that distributors play a crucial role in circulation and should not artificially inflate prices. He stresses the importance of distributor autonomy in trading decisions.
Bao disagrees with restrictions mandating distributors to buy solely from major suppliers, advocating for flexibility to optimize costs and supply. He proposes setting limits on internal trading levels to maintain market balance.
VCCI recommends two pricing mechanisms for petroleum products:
Option 1: Enterprises set selling prices independently with requirements for price transparency and consumer information.
Option 2: Simplifying price declaration procedures for enterprises selling at or below stipulated ceiling prices.
Strict market monitoring to prevent Competition Law violations is advised.
