11
Mar

Zero fuel import tariffs proposed to stabilize supply

The Ministry of Finance has proposed temporarily reducing the most-favored-nation import tariff to 0% on several gasoline and oil products and input materials to stabilize domestic supply.

The ministry said the global situation remains volatile, particularly due to tensions in the Middle East, which have caused sharp fluctuations in energy prices and disrupted global fuel supply chains, subsequently affecting the domestic market, according to a draft decree it recently submitted for appraisal.

Therefore, adjusting import tariffs is seen as a solution to stabilize supply and ensure national energy security, it said.

It noted that the conflict involving the U.S., Israel and Iran has substantially impacted global oil and gas businesses, including those in Vietnam.

Vietnam currently imports most of its oil and gas products from ASEAN countries and South Korea, which are subject to 0% import tariffs under free trade agreements.

However, amid global supply disruptions, sourcing refined fuel from these markets could also become more difficult. Maintaining the current tariff structure could therefore create obstacles for Vietnam in ensuring stable supply and price control.

To address this risk, the draft decree proposes reducing MFN import tariffs on oil and gas products to 0% until April 30, 2026.

Specifically, it proposed cutting the tariffs on unleaded motor gasoline and gasoline blending components such as naphtha and reformate from 10% to 0%, and those on diesel fuel, fuel oil, jet fuel and kerosene from 7% to 0%.

Several petrochemical feedstocks, including xylene, condensate and p-xylene, would also see tariffs reduced from 3% to 0% while other cyclic hydrocarbons would be cut from 2% to 0%.

The drafting agency estimates that if the new tariff rates were applied based on import turnover in 2025, state budget revenue could decline by about VND1.02 trillion (over US$38.9 million).

The proposal comes as domestic fuel prices have risen sharply. Last Saturday, retail fuel prices were raised, with E5 RON92 gasoline capped at VND25,226 per liter and RON95-III at VND27,047 per liter, up VND3,777 and VND4,707 respectively.

Meanwhile, diesel was priced at up to VND30,239 per liter, while kerosene reached VND35,091 per liter, up VND7,207 and VND8,490 per liter.