Vietnam Industrial Parks InfoGate ! Industrial Zones ! Export Processing Zones ! Petrol price hikes put pressure on businesses

Vo Ba, general director of Future Taxi, said petrol prices have increased twice, but taxi firms still keep the same fee.

“They will incur losses if they do not raise fees, but how should they increase? It is really a headache,” Ba said.

Passenger transport service providers are considering raising transport fees. Nguyen Ngoc Thua, director of Mien Dong Bus Station, said that he has not received any information about transport fee adjustment yet, but believes it will be raised soon.

Nguyen Ngoc Lu, deputy chairman of the HCM City Cargo Transportation Association, said transport firms have been facing serious problems so far this year. No one dares to raise transport fee, because they have to compete fiercely with each other for customers. “I think that with the latest price increase, transport firms will not have money for upgrading and repairing vehicles, which will affect traffic safety” he said.

Production companies also complain they are facing difficulties as a result of higher production costs.

Nguyen Tien Nghi, deputy chairman of the Vietnam Steel Association, said its members will have to make 700,000 tonnes of steel until the end of the year. Meanwhile, the fuel price increases is forcing them to spend 14 billion dong more to churn out the 700,000 tonnes of steel. Meanwhile, steel producers have had to reduce sale prices twice recently in order to make products competitive against imports.

Chu Van Thuoc, deputy director of Van Dien Fertiliser Company, complained that his company has also from coal price increases. It is expected that from December 1, 2009, the coal price to be applied to domestic producers will be equal to 90 percent of the export price.

Director of Hoang Thach Cement Company Dao Ngoc Binh said cement producers have had to reduce sale prices to compete with other producers. Meanwhile, they have to pay 40,000 dong per kilo more for coal, and suffer fuel increases.

Nevertheless, producers and service providers have all threatened to raise sale prices if they cannot stand overly high fuel and material prices.

Nguyen Manh Hung, chairman of the Vietnam Automobile Transport Association said enterprises have not raised the transport fee, though fuel prices have increased by 40 percent over the second quarter of the year. However, he warned that rises are likely in December 2009 or early 2010.

From early 2010, the basic wage will increase by 22.5 percent, the automobile ownership registration tax will increase by 5-10 percent, which will surely affect the transportation cost. Therefore, enterprises would need to raise the fee by 20 percent to cover the expenses.