After joining WTO, Vietnam did not intend to open its market to foreign petroleum distributors. However, the government of Vietnam made specific commitments in some cases to open the market.
Foreigners have been able to legally join the Vietnamese petroleum distribution market since the equitization of Vietnam’s leading petroleum corporation.
The Vietnam Petroleum Group sold 103.5 million shares, or 8%, to a foreign strategic partner – JX Nippon Oil & Energy from Japan. The state’s ownership ratio in the group has dropped to 75.87%.
With the Nghi Son Oil Refinery project in Thanh Hoa province developed by Idemitsu 8 and Vietnam’s national oil & gas group (PetroVietnam), consumers hope there will be a foreign distributor in the Vietnamese market which will help make the market more competitive.
Idemitsu 8 will have the right to join the domestic petroleum distribution market once the Nghi Son Oil Refinery becomes operational in 2017 with the capacity of 8.4 million tons of crude oil a year in the first phase.
This was an unprecedented commitment made by the government to the investor.
Phan The Rue, chair of VINPA (the Vietnam Petroleum Association), expressed his concern about the ‘foreign wave’ in the petroleum market, saying that the process of cutting the import tariff on petroleum products to zero percent will only finish in 2024, but foreign investors have threaded their way into Vietnam.
The same thing happened with the retail market. Though the committed deadline for opening the retail market did not come, foreign investors can still enter the domestic market by cooperating with Vietnamese companies.
“The government needs to build a strategy on developing the petroleum market in the long term and make a decision on whether to open the petroleum market sooner than committed,” Rue said.
“In order to protect domestic production, it is necessary to install barriers which are not prohibited by WTO to protect the market and domestic enterprises,” he said.
While petroleum companies expressed their concern about the market opening, experts say it is the right time to open the market.
Pham Tat Thang, a senior researcher at the Trade Institute, said that the business fields protected by the government would lag behind, while production would harm the economy and consumers.
A representative of a large petroleum corporation in the south admitted that once Vietnam became a WTO member and accepts to sell a stake in petroleum companies to foreigners, it will have to open the market, sooner or later.