Vietnam's Petrolimex diversifies gasoline loading ports ahead of ASEAN import tax cut

Singapore — Vietnam's Petrolimex has expanded the available loading ports in its latest January 2021 tender, allowing for gasoline to be loaded from several ASEAN ports in preparation for an upcoming fall in motor fuel import taxes in 2021.

The tender, which in total seeks 60,000 mt of either 90 RON or 92 RON gasoline, as well as 60,000 mt of 95 RON gasoline, for loading across January, has opened up the available loading ports to South Korea, Van Phong Terminal, Thailand, Malaysia, Brunei, the Philippines or Singapore, according to tender documents seen by S&P Global Platts.

Tenders that sought cargoes for the Vietnamese market were previously sourced mainly from South Korea, with the exception given to cargoes loading out of Vietnam's own Van Phong Terminal, Platts reported previously.

The opening up of available loading ports comes amid a transition in the country's gasoline import tax rates, which will see taxes for gasoline cargoes from South Korea and member countries of the ASEAN equalize in 2021.

Tariff revision

From 2021 onward, import taxes for gasoline cargoes from both ASEAN countries and South Korea will be lowered to 8%, according to the revised policy documents seen by Platts.

Over 2018-20, gasoline cargoes from South Korea were subject to a 10% import tax rate while cargoes from ASEAN were subjected to a higher 20% import tax.

The lower tax rate for South Korean supplies during the period was the result of Vietnam's Free Trade Agreement, or FTA, with its northeast Asian trading partner that took effect from Jan. 1, 2018.

However, Hanoi has decided to remove the tax rate differences between its northeast and Southeast Asian trading partners after the Regional Comprehensive Economic Partnership, or RCEP, was signed Nov. 15 on the sidelines of the annual summit of the ASEAN.

"The ASEAN Free Trade Area (AFTA) has now been virtually established ... ASEAN Member Countries have made significant progress in the lowering of intra-regional tariffs through the Common Effective Preferential Tariff (CEPT) Scheme for AFTA," the ASEAN said in a statement.

More than 99% of the products in the CEPT Inclusion List of ASEAN-6, comprising Brunei Darussalam, Indonesia, Malaysia, the Philippines, Singapore and Thailand, have been brought down to the 0%-5% tariff range, the association said.

"This [the equal import tax] provides opportunities to other [gasoline] players in the region to have a shot at the Vietnamese market," one Singapore-based trading source said.

"Previously, South Korean refiners were enjoying preferable rates. But now with the new Form KV and Form D, the premiums for Vietnamese cargoes will reflect more of the regional dynamics," another gasoline marketing and trading source added.

Form KV and Form D are documentations needed to be provided to the Vietnamese buyer by the seller that shows that the gasoline cargoes had originated from South Korea and ASEAN, respectively.

Supply-demand balance

Nevertheless, Vietnam's appetite for gasoline imports have been steadily declining over the past three years, with the startup of its 200,000 b/d Nghi Son refinery in 2018 having reduced the country's reliance on imported motor fuel.

Moreover, gasoline demand in 2020 has been fragile, with the pandemic still weighing on overall driving activity.

Reflecting this trend, Vietnam imported an average of 118,344 mt/month of gasoline from January to October, down from the average of 166,051 mt/month in 2019 and an average of 193,694 mt/month in 2018, according to customs data.