The fuel price stabilisation fund helps the central government manage domestic fuel prices for the foreseeable future, said Hoang Anh Tuan, Deputy Director of the Domestic Market Department under the Ministry of Industry and Trade, in a recent meeting with industry leaders.

Illustrative image (Source: VNA) 

The new Government Decree 83, which oversees regulations on fuel trading in the country, will continue to sanction the controversial fund.

Fuel traders and transport companies have argued that the fund, which is funded by fuel consumers for the most part and therefore effectively adds to fuel prices, delivers little to no benefits for traders and consumers alike. In addition, it also creates a gap between the domestic price for fuel and that of the international market which may encourage certain fraudulent activities and cross-border smuggling.

The Government, however, has always maintained that the fund serves as a tool to manage the domestic fuel price and is a necessity to make sure the interests of consumers and businesses are protected. The fund is part of efforts to keep fuel prices in line with market mechanisms under the State management and help control inflation and stabilise the macroeconomy.

In the last five years, the domestic fuel price had been well-regulated as fuel trading activities became more transparent and efficient, said Tuan, adding that the new decree was to continue building on the existing legal mechanisms while trying to address a number of shortcomings and limitations.

In order to do so, the ministry would carry out large-scale surveys among fuel traders to gather inputs and opinions on how to improve current regulations. Business conditions would also be cut to help new players gain entry to domestic fuel trading market and minimise resource waste.

According to a ministry report, the fund spent over 1.7 trillion VND (73 million USD) to maintain a stable fuel price during the second quarter of 2019 alone.