Local businesses hit hard by surging petroleum prices

Petroleum prices surpassed an eight-year high of VND25,000 per liter (US$1.10), which pile up further hardship for businesses and people that are still struggling to recover from the pandemic impacts.

A bus station in Hanoi. Photo: The Hanoi Times

Le Van Hien (Hanoi), a taxi driver at Mai Linh Taxi Company, said business was almost frozen since early 2021 due to strict Covid-19 measures, but now higher petroleum prices are sinking them further.

“Every day I drive for around 100 kilometers, half of them are with passengers and gain revenue of VND600,000 ($26.4). But by the end of the day, I would have to pay nearly VND400,000 ($17.6) of expenses, including petroleum prices, operation, and toll fees. Adding up with other monthly expenses and car depreciation, we driver are earning no profit, or even suffering losses if petroleum prices continue to go up,” Hien told The Hanoi Times.

With petroleum as a key expense for transportation companies, hiking prices for this product would result in higher service fees.

Khuc Huu Thanh Hai, director of Dat Cang Transportation Trading and Services Company, said operational expenses have been rising due to rising petroleum prices and compliance with Covid-19 countermeasures.

“The company is operating at a loss but trying to keep the transportation fares unchanged. But if the situation does not improve, we would have to adjust the fares,” Hai told The Hanoi Times.

Vice-Chairman of the Hanoi Transportation Association Do Van Bang said amid the pandemic, transportation companies are struggling to keep the business afloat and retain passengers at the same time.

“Many have scaled down operation or sold cars due to the lack of customers, but are still obliged to pay interest rates, rental fees, social insurance, toll fees,” Bang said, adding these issues have significantly impacted firms and subsequently lives of employees.

Customers at a supermarket in Hanoi.

Rising prices of services and consumption goods

Food prices in wholesale markets such as Ha Dong, Phung Khoang (Nam Tu Liem District) or Thanh Cong (Ba Dinh District) slightly increased prior to Tet. Sellers, however, anticipated that the prices would continue to go up due to rising transportation costs.

A survey conducted by The Hanoi Times’ reporters revealed prices of basic necessities rose by 10-30% against early 2021.

Nguyen Thi Hanh, an owner of a Pho restaurant in Nguyen Hong Street, Dong Da District, told The Hanoi Times that she may have to raise the price by VND5,000 as ingredients have become more expensive.

According to the Price Management Department under the Ministry of Finance, petroleum prices would be among factors piling pressure on the market prices after Tet.

At present, prices of petroleum and liquified natural gas (LNG) are on the rise due to high demand in the global market. In Vietnam, this had resulted in rising petroleum prices on the price reviewing period on February 11.

Meanwhile, as the local economy is still dependent on imported input materials, the country would face the risk of importing inflation given the rising prices of strategic goods worldwide and key economic partners reverting to contractionary monetary policies.