Prohibiting gasoline distribution businesses from buying and selling from each other is against the law.

Unfounded, against market rules

The Vietnam Chamber of Commerce and Industry (VCCI) has sent a dispatch to the Ministry of Industry and Trade to provide comments on the draft Decree on petroleum trading. In particular, VCCI has given many opinions related to the mechanism of petroleum prices, investment and business conditions, circulation reserves, etc.

Regarding the mutual trading of distributors, VCCI cited Article 17 of the Draft Regulations on the rights and obligations of petroleum distributors, which does not allow distributors to trade petroleum with each other.

According to the argument of the Ministry of Industry and Trade, if traders are allowed to distribute and trade gasoline among themselves, it will lead to round-trip trading, through many intermediary levels, pushing gasoline prices up.

However, VCCI emphasized that this argument is baseless and goes against market rules.

Parties in the wholesale petroleum market tend to prioritize buying from distributors with lower prices. VCCI assumes that there is a source of cheap goods, but because they are bought and sold through many intermediaries, causing the selling price to increase, buyers will go to the source of the goods to be able to buy at a cheaper price.

Accordingly, any distributor who sells at a high price will be eliminated from the market because they cannot compete with other wholesalers and distributors who sell at a lower price.

Many people disagree with the ban on traders distributing and buying and selling each other's gasoline. Photo: Ngoc Le

Previously, Decree 83 and Decree 95 on petroleum trading stipulated a 1:1 distribution system, meaning that retailers were forced to depend on distributors. In that case, if the distributor increased its selling price, retailers could not switch to another supplier and were forced to pay higher prices.

However, Decree 80/2023 on petroleum trading has allowed retailers to import goods from multiple sources. Competition in the wholesale market has increased, so the above situation no longer occurs, VCCI stated.

Some opinions say that allowing traders to distribute and buy and sell gasoline to each other could make the reported data on gasoline reserves inaccurate.

However, according to the draft, the obligation to reserve for circulation does not apply to distributors. Therefore, VCCI proposed that the drafting agency amend it to allow distributors to buy and sell gasoline with each other.

Need to create fair competition

Mr. Bui Ngoc Bao - Chairman of the Vietnam Petroleum Association affirmed that distributors are an important link in the circulation of goods. They are not intermediaries pushing up the price of gasoline.

According to him, there are many distributors that are larger than the main business, not that the distributors are smaller than the main business. Therefore, the type of distributors should not be limited.

"Since it is a market, where distributors buy and where they sell is up to them," Mr. Bao emphasized.

Expressing disagreement with the draft Decree requiring distributors to only buy from wholesale traders, Mr. Bao added that wholesale businesses do not always have enough goods at reasonable prices in each region and at each time.

The Chairman of the Vietnam Petroleum Association suggested that there should be regulations allowing traders to distribute and trade with each other and to set the ratio. For example, 50-70% can be freely purchased from the main enterprise, the remaining 30% can be bought and sold with each other. Because this is the business of regulating the market.

“If the market fluctuates abnormally, the amount of goods will be adjusted from traders distributing more goods to traders distributing less. Therefore, the proposal that traders distributing goods should not buy from each other is something that needs to be carefully considered and evaluated,” Mr. Bao suggested.

A petroleum business in the South told Lao Dong that distributors are businesses with the right to compete freely, but the draft only allows them to buy from the main business, not cross-buying from each other, which does not ensure market competition.

"During periods of erratic prices, thanks to cross-selling, distributors can share with each other about quantity and selling price. Restricting this right may not stabilize the market," said the business leader.

This person also said that it is necessary to consider and research to re-draft the Decree in a direction that closely follows the practical situation, ensuring the institutional and legal foundation to build a transparent and favorable business environment and fair and equal competition.

Source: https://laodong.vn/kinh-doanh/cam-doanh-nghiep-phan-phoi-xang-dau-mua-ban-cua-nhau-la-nguoc-quy-luat-1373793.ldo