Dearer Petrol Pushes up Costs of Manufacturing Industries

The latest petrol price hike which was made last week could push up production costs of manufacturing industries by 0.05 per cent to 4.9 per cent, the Ministry of Finance has said.

Off-shore fishing would be hardest hit by the price rise, as the ministry estimated that its input cost could soar 4.9 per cent.

Input costs of the coal, electricity, cement, steel and paper industries were estimated to go up by 0.06 per cent and 1.4 per cent, the freighting sector, by 1.7 per cent to 4.3 per cent, and the agricultural sector, by 0.05 per cent to 0.8 per cent.

At the press briefing to introduce the new petroleum prices in Hanoi on August 9, Deputy Finance Minister Tran Van Ta said the rise was unavoidable.

He said in the process of integrating into the global economy, Vietnam cannot maintain a separate pricing system, including petroleum prices, from the world prices.

However, the Finance Ministry asserted that the petroleum price hike is not a decisive factor in the growth of the consumer price index (CPI).

Sharing this view, Houng Lee, the Country Representative of the International Monetary Fund (IMF), commented that due to the low profile of petroleum in the group of commodities used for calculating the national CPI, the direct impact of a petroleum price rise on the CPI growth rate in Vietnam is not great.

Nevertheless, the prices of commodities and services always fluctuate after each increase in petrol prices. Thus, the rise in CPI could be attributed to the "chain reaction" of other industries and sectors.

Anticipating this reaction, the government has agreed to postpone increasing the prices of electricity and coal in the near future, Ta said.

The government has also requested ministries, branches and localities to work together to stabilize the prices and tighten market control to prevent the domino effect from the adjustment of petroleum prices as well as negative effects on the CPI and the national economic growth rate.

Besides, the government has ordered businesses to employ all measures of utilizing new technology and new materials and renewing production management to reduce production cost and increase the competitiveness of commodities.