The first Vietnamese retail outlet of Idemitsu Q8 petroleum company was opened last week in Hanoi, marking the first time a wholly foreign-owned firm has entered the fuel retail sector.
Idemitsu Q8 Petroleum LLC was formed via a joint venture between Japan’s Idemitsu and Kuwait Petroleum International Ltd.
The two companies were the first to benefit from a landmark government decision last year, which allows foreign businesses to distribute fuel products in Vietnam on the condition that they invest in the country’s oil refinery projects.
Previously, Vietnam’s World Trade Organization (WTO) commitments had prevented foreign players from selling, distributing, exporting and importing fuel inside the country.
The entrance of Idemitsu Q8 into Vietnam’s fuel market is welcomed as a positive change in the local petroleum retail sector, which has until now been dominated by domestic companies.
Phan The Rue, chairman of the Vietnam Petroleum Association, said that it was unlikely that Idemitsu Q8 would take over the local market any time soon given the wide gap in their retail network compared to domestic firms.
Petrolimex, for example, already owns a network of approximately 2,700 outlets across the country while Idemitsu Q8 has only one, Rue pointed out.
However, the chairman noted that the foreign firm would bring a breath of fresh air to the Vietnamese market by allowing card payment and employing automatic management software.
Rue also voiced his concern that Vietnam’s fuel market would not be fully open to foreign players if petroleum prices continue to be subject to government regulation instead of being determined by market demand.
“The government needs to eliminate the current baseline price for oil and gas if truly fair competition is to be achieved,” Rue said.