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Taxi firms slow to pass on fuel price gains

Update: February, 03/2015 - 09:18
Most taxi firms in Ha Noi made deep cuts for the first 600 metres from VND8,000 to 9,000 (37-42 cents) to VND5,000 - 6,000 (23-28 cents) per km. — Photo vietnamnet

HA NOI (VNS) — Taxi companies have made only superficial price cuts to mark the large fall in fuel prices, despite an order by Prime Minister Nguyen Tan Dung that transport rates must be lowered before Tet (Lunar New Year).

Thoi Bao Kinh Doanh (Business Times) reported that taxis reduced their rate for the first kilometre only, while making only small or no changes to the rates applied to the following kilometres.

The newspaper's investigation found that most taxi firms in Ha Noi made deep cuts for the first 600 metres from VND8,000 to 9,000 (37-42 cents) to VND5,000 - 6,000 (23-28 cents) per km.

However, for the ensuing 20 kilometres, the rate remained unchanged at VND11,000 (51 cents) per kilometre and for the kilometres that follow, the same VND9,000-10,000 (42-46 cents) per km.

A cab driver in Ha Noi, who wanted not to be named, said that the cut was nominal because it was the kilometres after the first 600 metres that decided 90 per cent of the cost for the whole journey.

The newspaper calculated that as petrol had dropped by VND7,650 (36cents) or 32.5 per cent since July 2014, the taxi fare had fallen by only eight per cent.

However, the newspaper said that as the petrol price had decreased 32 per cent, and considering that petrol accounts for 30 per cent of the taxi fare, the taxi fare should have been reduced by 9.75 per cent to be fair.

It said that if a passenger travelled 16 km with the rate for the first 600 metres being VND6,000 and the following kilometres at VND11,000, he would have to pay VND175,000 ($8.20) for his trip, which means still as high as VND10,962 (51 cents) per km.

Do Thang Hai, deputy minister of Industry and Trade, said "after 15 cuts in petrol price, which is equivalent to a 30 per cent reduction or VND10,000 (46 cents) per litre, the prices of oil price-affected goods and services should also have come down accordingly to benefit the economy and people.

"If transport rates cannot be brought down, then it is due to the incompetence of the State and national agencies that manage prices," the minister said.

Bui Danh Lien, president of Ha Noi Car Transport Association, said that the fare slashes offered by taxi firms typically ranged from five to 10 per cent.

He said they reached 15 per cent at only a few businesses and claimed that this did not correspond to the reduced petrol price. "Businesses are looking to others when it comes to slashing their rates," Lien said. "If larger businesses do not make price cuts first, the smaller ones will not follow suit."

Under the current regulations, when petrol prices fall, transport companies are supposed to also reduce their rates.

Le Thi Loan, vice director of Ha Noi Finance Department, said that transport companies that do not reduce their prices will risk inspections no matter whatever excuse they may produce.

"The inspection will determine what their input costs are and what fares should be," he said. "If they have made small cuts, they will still be inspected."

Loan warned businesses to calculate and post their fares, adding that those that did not comply would be named in the mass media.

Loan said that the Ministry of Finance had set up three inspection missions to check the status of transport prices in Ha Noi, Da Nang, HCM City, Binh Duong and Dong Nai on January 26.

One of the missions had visited 81 taxi and 25 inter-provincial coal companies in Ha Noi, as well as buses at the city's My Dinh Bus Station, Kinh te Do thi (Urban Economic Affairs) reported.

Investigators found that the Ha Noi Taxi Joint Stock Company, Vinamotor Investment Joint Stock Company (inter-provincial coach service) and Mai Linh Dong Do Joint Stock Company (taxi service), had slashed their rates by seven to 20 per cent and were committed to further cuts if the price of oil dropped further.

Meanwhile, the joint-agency mission found that 85 bus companies, headquarted in Ha Noi or in other provinces and operating here had declared their reduced tickets to the station's ticket office. — VNS

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