Vietnam prepares for opening of petroleum market

Vietnam prepares for opening of petroleum market

Vietnamese petroleum companies have enough time to build facilities and
develop networks to prepare for competition with foreign distributors once
Vietnam opens the petroleum market, experts say.

After joining WTO, Vietnam did not intend to open its market to foreign
petroleum distributors. However, the government of Vietnam made specific
commitments in some cases to open the market.

Foreigners have been able to legally join the Vietnamese petroleum
distribution market since the equitization of Vietnam's leading petroleum
corporation.

The Vietnam Petroleum Group sold 103.5 million shares, or 8 percent, to a
foreign strategic partner - JX Nippon Oil & Energy from Japan. The state's
ownership ratio in the group has dropped to 75.87 percent.

With the Nghi Son Oil Refinery project in Thanh Hoa province developed by
Idemitsu 8 and Vietnam's national oil & gas group (PetroVietnam), consumers
hope there will be a foreign distributor in the Vietnamese market which will
help make the market more competitive.

Idemitsu 8 will have the right to join the domestic petroleum distribution
market once the Nghi Son Oil Refinery becomes operational in 2017 with the
capacity of 8.4 million tons of crude oil a year in the first phase.

This was an unprecedented commitment made by the government to the investor.

Phan The Rue, chair of VINPA (the Vietnam Petroleum Association), expressed
his concern about the 'foreign wave' in the petroleum market, saying that
the process of cutting the import tariff on petroleum products to zero
percent will only finish in 2024, but foreign investors have threaded their
way into Vietnam.

The same thing happened with the retail market. Though the committed
deadline for opening the retail market did not come, foreign investors can
still enter the domestic market by cooperating with Vietnamese companies.

"The government needs to build a strategy on developing the petroleum market
in the long term and make a decision on whether to open the petroleum market
sooner than committed," Rue said.

"In order to protect domestic production, it is necessary to install
barriers which are not prohibited by WTO to protect the market and domestic
enterprises," he said.

While petroleum companies expressed their concern about the market opening,
experts say it is the right time to open the market.

Pham Tat Thang, a senior researcher at the Trade Institute, said that the
business fields protected by the government would lag behind, while
production would harm the economy and consumers.

A representative of a large petroleum corporation in the south admitted that
once Vietnam became a WTO member and accepts to sell a stake in petroleum
companies to foreigners, it will have to open the market, sooner or later.

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Link to Original Article:
http://english.vietnamnet.vn/fms/business/179062/vietnam-prepares-for-openin
g-of-petroleum-market.html

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John Diecker
APT Consulting Group Co., Ltd.

www.aptthailand.com