Milk Prices in Vietnam: Controversial

According to statistics given by the General Department of Customs, Vietnam is now home to more than 200 milk importers. This is a quite big figure to form a healthy competition in the Vietnamese milk sector, particularly when milk prices and imported milk materials are falling in the world; the prices in Vietnam have been continuing to rise. According to a report from the Ministry of Industry and Trade’s Price Management Department, last year, a range of big milk companies in Vietnam such as Vinamilk and 3A Limited Company (distributor of Abott) raised prices of 56 milk products for three times by an average of between 1.5 percent and 10.8 percent and between 4 percent and 7.8 percent, respectively. Other firms like Vietnam Nutrition Joint Stock Company (distributor of Dumex) raised prices of 31 products by between 3 percent and 21 percent while Dutch Lady Vietnam Company hiked price of Dutch Lady Milk products by between 6 percent and 10 percent and price of Anpha by between 9 percent and 10 percent.

 

In comparison with the milk prices in countries in the region, Mr Dang Hoang Hai, Deputy Head of the Ministry of Industry and Trade’s Competition Management Agency quoted a survey by the agency’s Consumer Protection Office that the prices of canned power milk in Vietnam is between 20 percent 40 percent higher than those in other countries. For example, the prices of the U.S. Abbott and MeadJohnson milk in Vietnam are between 20 percent and 30 percent higher than those in Thailand, Malaysia and Indonesia. The prices of Dumex 1, 2, 3, which are imported from different countries, are often between 100 percent and 150 percent higher than those of the same kinds imported from Thailand, Malaysia and Indonesia.

While explaining such a high retail price, people give different ideas that the VND/USD currency rate has increased by between 6 percent and 8 percent and that import tariffs and valued added tax (VAT) on power milk in Vietnam are different from those in other countries, causing price disparity.

 

However, the import tariffs on the power milk in Thailand, Malaysia, and Indonesia are around 5 percent lower tan those in Vietnam. Rationally, milk products of the same kinds in Vietnam should be 10 percent higher than those in other countries due to higher import tariff; however, the milk prices in Vietnam are between 25 percent and 30 percent higher and even 150 percent higher than those in other countries.

 

Mr Vu Cong Chinh, Deputy Head of the Ministry of Finance’s Price Management Department, however, said that the domestic milk prices are 70 percent higher than those in exporting countries, of which, price of milk materials are 50 percent higher and prices of milk products are 22 percent higher. Locally produced milk products use entire imported materials and foreign milk products are totally imported. Such a current mechanism for local production as well as imports of the milk products indicates that the Vietnamese milk market is heavily dependant on foreign markets, particularly quantities, types of goods, prices and trading forms.

 

Experts attributed the price disparity to many elements that the implementation of trademark forming strategy is inefficient in Vietnam and that locally made milk products are priced lower as they are made of domestic materials.

 

Vietnam Business Forum’s reporter Kim Phuong would like to introduce ideas of experts about this issue:

 

Three agencies could be responsible for the price disparity. The first is tax calculator who undertakes inspection after customs clearance to foster transparency of the import prices, facilitate equality and prevent price disparity and trade frauds. The second is tax supervisor that keeps a close watch on rational expenses, asks for bills upon goods sales to ensure suitable selling prices, fosters transparency of the price disparity at all phases and compel beneficiaries to pay income taxes. The third is market control agency who checks to ensure goods sales with announced labels, asks traders to list their prices and follow the listing and supervises implementation of trade promotion programmes.

Milk products are goods with stable prices; therefore, within a minimum of 15 successive days, if the milk retail prices rise by 20 percent and the upwards compared with the previous prices, measures to stabilize the prices should be applied. In fact, the situation has not yet happened in Vietnam. However, in response to rumours on milk price hikes, the Ministry of Finance has assigned the Vietnam General Department of Taxation to coordinate with the Price Management Department to set up an inspection group for the milk prices.

The domestic market has recently witnessed consecutive incidents related to milk quality like melamine-contained and low protein-contained milk; however, outdated solutions and information access have considerably affected production and trading activities by almost milk companies in general and Nutifood in particular.

 

The information covering has, by accident, equated genuine producers to deceitful traders, which has resulted in unnecessary puzzlement and worry by consumers who then are compelled to paid double or triple prices for imported milk products with the same function, nutrition content and material and even production technology instead of the locally made products to feel more secure. Therefore, regardless of any forms of reaction, both consumers and producers are considerably affected due to arising spending on testing, communication, falling production and narrowed revenue.