The Ministry of Finance has proposed to increase export tariffs on tapioca chips and ethanol, considering their high demand in the domestic market.

According to a draft proposal for adjusting tariffs on E5 petrol (ethanol petrol) and materials used for making ethanol petrol, export tariffs should be increased from zero to 5 percent on tapioca chips used to produce ethanol and 3 percent on ethanol made domestically.

The ministry said the increase of the export tariffs on tapioca chips and ethanol will ensure enough supply for producing bio petrol.

Meanwhile, the state will encourage the people to use bio petrol, according to a report in the Thoi bao Kinh te Vietnam (Vietnam Economic Times) newspaper.

Although tapioca chips is a main ingredient for producing ethanol and one of the important materials for processing bio petrol, its exports have increased sharply.

Tapioca exports rose 24 percent year-on-year in volume to 1.37 million tonnes in the first quarter of this year and 7.91 percent year-on-year to 3.3 million tonnes in 2014, according to the Ministry of Agriculture and Rural Development.

The increase in the exports of tapioca, the main raw material for bio petrol production, has affected the industries that are manufacturing bio petrol for selling it nationwide from December 2015.

Vietnam has many high-capacity ethanol factories, including Dong Xanh factory in Quang Nam province (with an annual capacity of 120 million litres of ethanol), Tung Lam Factory in Dong Nai province (72 million litres), Binh Phuoc Factory (100 million litres), Dac To Factory (72 million litres), Dac Nong Factory (45 million litres), and Phu Tho Factory (100 million litres).

If those factories run their full capacity, they will be able to produce about 500 million litres of ethanol and process 10 billion litres of E5 petrol and 5 billion litres of E10 petrol.

However, since they lack materials for producing ethanol, they must produce moderate quantities.

The ethanol manufacturing industry, which is already troubled by the high prices of raw materials, has to compete with traders buying tapioca for exporting them to China.-VNA