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Gov't keeps eye on carriers after drop in fuel prices

Update: December, 28/2015 - 08:23

Petrol prices have fallen by 20.8 per cent since July of this year, cutting the operation costs of petrol-powered vehicles by 5.2-7.3 per cent, according to the finance ministry. Diesel prices are down 25.5 per cent, reducing costs by 8.9-11.5 per cent. — Photo vov

Compiled by Le Hung Vong & Thien Ly

The Ministry of Transport has instructed relevant agencies to closely monitor fees charged by carriers to ensure the decrease in fuel prices is factored in.

In a dispatch dated December 22 the ministry instructed provincial transport departments to get carriers to re-register the rates with their constituent components.

They have been told to co-ordinate with provincial finance departments to ensure the rates are registered and posted, and penalise violators, even revoking their licences if required.

The dispatch came after the finance ministry urged the transport ministry to ensure transporters reduced fees amid the low fuel prices. The former had received many complaints about the unreasonably high rates.

Retailers at Ho Thi Ky Flower Market in HCM City's District 10, for instance, had complained that the cost of transporting flowers from Da Lat to HCM City remained unchanged though fuel prices had been cut several times.

Nguyen Anh Tuan, head of the finance ministry's price management department, said though fuel prices have dropped drastically since mid-September, transportation rates remained almost unchanged.

Petrol prices have fallen by 20.8 per cent since July of this year, cutting the operation costs of petrol-powered vehicles by 5.2-7.3 per cent, according to the finance ministry. Diesel prices are down 25.5 per cent, reducing costs by 8.9-11.5 per cent.

Fuel accounts for 30-40 per cent of transporters' costs, and so it is unacceptable if rates are not reduced after the sharp fall in fuel prices, Tuan said.

"If carriers decline to cut fees, transport management agencies will not only impose fines but also revoke their business licenses."

Phan The Rue, a former deputy industry and trade minister, said many transporters, especially taxi companies, have either failed to cut or delayed cutting rates or made cuts not in proportion to the fall in fuel prices.

Figures from the Finance Ministry also reveal that as of 18 December of this year, fuel prices have been adjusted for 23 times. Prices of A92 petrol have been lowered for 12 times with total price reduction of VND7,311 per litre and increased for six times with total price addition of VND5,826 per litre. Prices of A92 petrol have also been subsidised for five times by the Price Stabilisation Fund that aims to prevent fuel price hikes.

Expressway proposed

Two bidders, one of them a four-member consortium including a giant Indian firm, have expressed interest in building an 84.5km expressway between HCM City and the Moc Bai Border Gate in the southern province of Tay Ninh, according to a transport ministry source.

The consortium comprising India's IL&FS Transportation Networks Limited (ITNL) and the local Thai Son Investment Development JSC (under the Ministry of Defence), Cai Mep Investment JSC, and Red River Construction Investment and Trading JSC wants to build the expressway under the build-operate-transfer (BOT) mode.

A spokesman for it said since the constituent companies have strong financial capability and experience in developing transport projects in Viet Nam, they can complete the work on schedule.

The three domestic companies are involved in major transport projects in Viet Nam, while ITNL is the largest public-private partnership (PPP) and BOT operator in infrastructure in India.

ITNL's annual revenues from operating BOT projects top US$1 billion. It has acquired a 49 per cent stake in the Ha Noi-Hai Phong Expressway, which opened to traffic on December 5.

Their rival for the HCM City-Moc Bai Expressway is the State-owned Cuu Long Corporation for Investment Development and Project Management of Infrastructure (Cuu Long CIPM), which also seeks to build it under BOT mode with funding from the Government.

According to Cuu Long, the highway will be built in two phases.

The first phase will comprise a 4km stretch of Beltway No 3 in HCM City and a 51.5km section from the beltway at a total cost of VND16.36 trillion ($725.7 million).

The second phase will include a 20km viaduct on the Trans-Asia Highway and a 9km viaduct on National Highway No 22 at a total cost of VND15.5 trillion ($687.6 million).

Cuu Long CIPM has suggested using funding from the Government's coffers, including ODA loans from the Japan International Cooperation Agency and the Asian Development Bank.

If approved, work on the expressway will begin in the first quarter of 2018 and the road will open to traffic in 2021.

The expressway will run up to the intersection of National Highway No 22 and Provincial Road No786 in Tay Ninh's Ben Cau District.

Cuu Long proposes building four lanes in the initial phase before expanding it to six lanes later.

According to Ministry of Transport consulting firm Transport Engineering and Design Inc. South (Tedi South), the expressway can accommodate around 62,000 PCUs (passenger car units) a day by 2040.

Once finished, along with National Highway No22, the Ho Chi Minh Road, Beltways Nos 3 and 4 in HCM City, the expressway will form a trans-national road network connecting cities like Bangkok, Phnom Penh, and HCM City.

Little impact

The zero interest rate on dollar deposits is seemingly not doing much to curb speculation in and hoarding of the currency by enterprises and individuals, according to analysts.

On December 18, the State Bank of Viet Nam cut the rate to zero from a maximum of 0.25 per cent after the US Federal Reserve raised its interest rates by 0.25 percentage points.

In September the central had cut the interest rate cap on dollar deposits by organisations and companies from 0.25 per cent to zero, and the rate for individuals from 0.75 per cent to 0.25 per cent.

But there has not been much effect, with not many individuals or businesses selling the greenback to banks, preferring instead to hold on to them.

An executive at a seafood export company in the Mekong Delta said, "We keep [part of our dollar earnings] in anticipation of a possible increase in the exchange rate."

Tran Minh Tuan, the head of a HCM City-based company specialising in import of equipment and machinery from China, offered a similar explanation, saying recent volatility in the exchange rate between the dong and the dollar increased manufacturing costs and expenses.

"It is predicted that the [dollar] may be up slightly after the FED adjusted the interest rate by 0.25 per cent.

"Because of this we have readied a considerable amount of dollars for paying for the last consignments before 2015 ends to reduce costs."

Even individuals, who do not need dollars to pay for business activities, continue to hoard the greenback.

Tran Huyen Thanh, who lives HCM City's Tan Binh District, said her savings are always divided into two parts, dong and dollar, and both are deposited at a bank near her house.

"Though the dollar deposit interest rate was cut to zero I have no plan to convert my dollars into dong. This is because I am afraid of the possibility of a depreciation of the dong."

A member of the National Monetary and Financial Policy Advisory Council, who did not want to be named, admitted that speculation in the greenback by companies and individuals continues.

The central bank's cutting of the interest rate on dollar deposits has not had an impact on the supply of the currency in the market, he revealed.

"Businesses want to avoid exchange rate risks. Moreover, both businesses and individuals have got used to the low interest rates on dollar deposits since they have been very low for a long time." — VNS

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