The recently announced fuel auction in Vietnam aims to increase fuel supply and stabilize prices in the short term by auctioning off 100 million liters of gasoline. However, it does not fully resolve the underlying fuel shortage issue. To mitigate the economic impact of rising fuel prices, the Vietnamese government is considering short-term solutions like reducing fuel taxes and using the petroleum price stabilization fund to support fuel prices for businesses. However, these are not long-term solutions and the government needs to avoid interfering too much in prices as Vietnam follows a market economy model.

1. VIETNAM - FUEL MARKETS AND FUEL AUCTIONS - IMPACT ON
ECONOMY
1. How the recently announced fuel auction might affect fuel markets in Vietnam
and will it resolve the shortage? Is this an effective long-term solution?
Information about the upcoming auction has slowed down the increase in fuel prices,
so it will positively affect the entire fuel market. More specifically, the purpose of the
auction of 100 million liters of gasoline is to have more supply for the market, resulting
from the lack of supply at Nghi Son Refinery and increased imports of key enterprises
are still coming. Therefore, the auction is just for the short term and does not completely
resolve the shortage.
2. What else can be done to mitigate the impact of rising fuel prices on the Vietnam
economy?
- Vietnamese Prime Minister decisively has directed government agencies to proceed
some solutions to mitigate the impact of the increase of rising fuel prices as stated in
the Dispatch No. 160/CD-TTg dated 22/2/2022 on ensuring the supply of fuel for the
domestic market:
oReducing taxes on fuels, specifically adjusting the tax policy for environmental
protection for petroleum products. However, the tax rate on fuel price only
accounts for 38-39% and fuel price in Vietnam is currently much lower than
in other countries in the world, so it can lead to cross-border fuel smuggling,
leading to the reluctance of the government towards this solution;
oUsing the BOG Fund (Petroleum Price Stabilization Fund), thereby supporting
fuel prices for businesses so that the market price in Vietnam is low compared
to other countries;
oProactively clarifying information to ensure alternative sources of supply.
Avoid spreading fake news, overdoing it affects the general psychology of
the people, leading to hoarding of goods waiting for prices to increase;
oEnhancing inspection and raise the fines for individuals and organizations that
deliberately hoard fuel and wait for the price increase;

2. - Besides, the government can support people indirectly by reducing VAT from 10% to
8% or create a database of fuel consumption demand in each location at each time
(normal and abnormal), as a basis for requesting key suppliers to supply enough fuel.
- However, all of these are only short-term solutions because Vietnam must follow the
law of the market economy (when the world increases, it increases). Thus, if the
government interferes too much, it will drag the economy back to the previous subsidy
period.
Reviewed Materials
1/ https://tienphong.vn/can-thiep-giam-gia-xang-dau-se-keo-theo-nhieu-he-luy-
post1417676.tpo
2/ https://moit.gov.vn/tin-tuc/thi-truong-trong-nuoc/bao-dam-cung-ung-xang-dau-cho-thi-
truong-trong-nuoc.html
3/ https://thanhnien.vn/len-ke-hoach-dau-gia-gan-102-trieu-lit-xang-tu-nguon-du-tru-quoc-
gia-post1431920.html
4/ https://moit.gov.vn/tin-tuc/thi-truong-trong-nuoc/thong-tin-dieu-hanh-xang-dau-ngay-21-
02-2022.html
Legal Basis
1/ Law on property auction No. 01/2016/QH14;
2/ Decree No. 83/2014/ND-CP on Petrol and Oil Trading;
3/ Dispatch No. 160/CD-TTg dated 22/2/2022 on ensuring the supply of fuel for the domestic
market.
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Please do not hesitate to contact Dr. Oliver Massmann under omassmann@duanemorris.com if
you have any questions or want to know more details on the above. Dr. Oliver Massmann is
the General Director of Duane Morris Vietnam LLC.