A92 petrol is no longer sold in Vietnam and has been replaced with E5 biofuel. However, people are not buying E5, according to a representative of Saigon Petro.

The sales of E5 in the southern region accounted for 30 percent in 2018, but the proportion fell to below 20 percent in the first six months of 2019. This means that only 20 percent of fuel sold is E5, while 80 percent is A95. Analysts predicted that the figure would decrease further in the time to come.

“People are indifferent to biofuel because of the narrow gap in prices between biofuel and A95, about VND1,600 per liter,” the representative said.

Agreeing with Saigon Petro, a senior official of the HCMC Industry and Trade Department said to persuade people to use biofuel, the price gap should be widened.

The current narrow gap is attributed to the environmental protection tax law. The current tax rate is VND4,000 per liter on A95 and VND3,800 on E5.

Agreeing with Saigon Petro, a senior official of the HCMC Industry and Trade Department said to persuade people to use biofuel, the price gap should be widened.

The same situation is occurring with biodegradable environmentally friendly packaging. Retailers and consumers have turned their backs to the products because they are more expensive than normal plastic bags.

According to the Sai Gon Packaging JSC, the production cost of biodegradable bags is much higher than the cost of normal plastic bags. Both biodegradable and normal plastic bags bear the same environmental protection tax rate. Consumers aren't encouraged to use environmentally friendly bags.

“With the imposition of the same tax rate on environmentally friendly and normal plastic bag, the production cost of the former product is VND40,000-50,000 higher than the latter,” he complained.

“We are afraid that we will have to stop making environmentally-friendly garbage containing bags,” he added.

Meanwhile, the Sai Gon Packaging Company has complained about the unfair competition in the market. There are many plastic bag production workshops that have not registered their business. In other words, the workshops evade tax, which allows them to sell products to merchants at low retail prices.

“Environmentally friendly bags find it difficult to compete with normal plastic bags in the market. They can only penetrate some supermarkets, and are refused at traditional markets,” a representative of the company said.

Solutions

In order to widen the price gap between E5 and A95, Saigon Petro suggested lowering the environmental protection tax rate on E5. The company also said that it would be better not to tax E5 based on the ethanol content as currently applied.

The company believes that the price gap of VND2,000-2,500 per liter would be high enough to increase the sales of E5.

Kim Chi 

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