Joining Hands to Stabilise Market

Statistically, milk price has risen 3-4 times since the beginning of the year. As commented by many consumers, imported milk has had higher rise as U.S dollar appreciates. Yet, milk price will not go up further if there is no big fluctuation until the end of the year because higher price will make consumers tighten their spending and thus affect corporate revenue. Not only milk, cooking oil is also an item with spinning price rise. If a five-litre can of Simply was sold at VND110,000 earlier this year, its price has jumped to VND130,000, and now more or less VND200,000. Furthermore, medicine and construction materials all lie in the group of commodities having strong price growth rate. Soaring price of construction materials causes headache to investors. The Government is also forced to adjust estimates and postpone many works to cut public investment. As for private construction works, the owners have to bear over-spending items. Many people must cut down unnecessary parts.

 

According to Price Management Bureau, Ministry of Finance, recent growth rate of consumer price has been lower than that in the first months of the year. Beside the false rumour about increase in oil and gas price, prices in Hochiminh city remain normal. There is no sponging price rise of other products when oil price goes up as it used to happen before. Price of many goods like seafood, vegetables, fruit, cement, steel and gas even drops slightly. In other provinces and cities, prices are relatively stable. To supervise market price more strictly the Government has promulgated Decree 75 revising and complementing some articles of Decree 170 guiding the implementation of Price Ordinance in mid-June. The Ministry of Finance and the Ministry of Industry and Trade have drafted a circular guiding the implementation of this Decree and are taking suggestions from 64 cities and provinces. When this circular is issued and functional agencies follow its instruction seriously, prices will definitely be in control. New points in the Decree 75 are as follows: Firstly, it assures synchronisation, helping to avoid overlapping in price management in the Price Ordinance and other laws directly affecting price management such as Land Law regulating price of land, Electricity Law regulating price of electricity. Secondly, it adds some more indispensable commodities to the category of price management, for example veterinary medicine, chemical fertilisers, some kinds of livestock food, sugar, and milk. Thirdly, more measures of price management and stabilisation are added like price registration, price declaration, price publication, application of administrative punishment within the competence to deal with price violation. Fourthly, to decentralise further price management to ministries, industries, People’s Committees of provinces and centrally controlled cities. Finally, specifying some contents related to price management, supervision of price components, in which defining a checking list of items within the sphere of supervising price components. However, market supervision over the past time still shows weaknesses. In particular, coordination among agencies remains mismatched and dispatching forces later than the situation requires. Market supervision is not conducted regularly, thus many problems need fixing. Moreover, legal framework and sanctions are not strong enough and need improving in the coming time.

 

The responsibility of state administrative organisations is to provide regularly official information about national socio-economic performance and world and domestic price movements to social classes and forecasts to help them behave properly. Yet, a false rumour about price rise occurred during the past time because our information remained untimely and lacked regular updates. Meanwhile lots of information from outside sources affects the domestic economy, state administrative agencies do not provide any official information leading to self-prediction and self-behaviour of many people. To prevent rumours causing market disorder, there are administrative punishments applied to false information about price. If there are signs of crime, that activity can even be taken penal proceedings against.

 

Consumers are passive at price rise. There is no official information source. They must accept abrupt ups and downs in price. Price Ordinance and guiding decrees and circulars mention about a very important content, namely registration and listing of selling price. However, not all consumers have an opportunity to approach listed prices as the distribution system in Vietnam is not professional, short of linkage and remains scattered. “Smart consumers” should take part in market stabilisation, avoiding psychological impact that may lead to market disorder, speculation and false scarcity of some commodities in the market. False rumours are unavoidable but consumers must be cautious and look for information from different sources.

 

As for construction materials only, steel producers over the past time always publicised their price lists at representative offices in key markets. However, it is hard for consumers to approach selling prices at tier-one agents. Final price is often much higher than listed price. In the near future, the Vietnam Steel Association will attempt to solve this problem. Steel price used to go up, as Vietnam had to import more than half of steel material. World price of steel material rose leading an increase in steel price. Some agents made use of this movement to push up domestic steel price irrationally. The Association is studying and considering irrational issues in the distribution system to make adjustments. Steel price among provinces have differences because there are more than 30 producers in Vietnam. Each producer has their own equipment and technologies that decide the unit price. The Association will try to help consumers select and recognise which is true price and which is distorted price from the distribution system.