The Vietnam Gas Association has recommended the Ministry of Finance cut the import tax on liquefied petroleum gas (LPG) from the current 5 percent to 2 percent to force domestic LPG traders to drop their retail prices, said the association’s chairman Nguyen Si Thang.

Thang said that the current 5 percent tax rate was bought in a decade ago when a tonne of LPG cost 200 USD. Today, a tonne of LPG cost boughly 790USD.

Thang explained that the 5 percent tax rate was considered reasonable when the country had to import all its LPG but now, it import only half of the LPG demand.
Meanwhile, domestic LPG producers still price their product in line with the import LPG plus the 5 percent import tax.

“This means the price of LPG on the domestic market is too high and unreasonable, affecting consumers’ interest,” Thang explained.

If the approval is ratified, domestic LPG traders will have to cut their retail prices to match the drop in the price of imported LPG, helping consumers to enjoy a more reasonable price frame, Thang said.

The country consumes an average of 950,000 tonnes of LPG percent, with roughly 50 percent of the total produced domestically at the country’s only LPG plant in southern Ba Ria-Vung Tau province. The country imports the remainder mainly from neighbouring China .

PetroVietnam forecasts that the country’s LPG demand will rise by more than 50 percent to 1.2-1.3 million tonnes per year by the end of 2010. It said additional demand will then double to 2.4 million tonnes per year by 2020, with domestic supply covering roughly 1.8 million tonnes of the total./.