Avoiding Multiple Price Increases during Tet Holiday

The target of CPI in 2012 possibly lower than 10 percent is one of the positive signs for Government’s efforts to curb inflation. However, at the year-end, the information that prices of some necessary goods such as electricity, coal, milk and transportation are rising has caused people to worry of another double price increase. Vietnam Business Forum interviewed Mr Nguyen Tien Thoa, Director of Department of Price Management, Ministry of Finance, about management on price forming factors. Huong Giang reports.

 

Firstly, once market price mechanism is adopted, prices should fluctuate under market’s signs without being set subjectively at a static level in the domestic market, while the world’s price and price forming factors have changed. However, full free-floating domestic prices should be avoided, to keep prices from getting too high or too low unreasonably. The price accepted by the market requires a consistent combination of many factors, including controlling price registration of enterprises which do business of such goods. Control has been implemented by enterprises and authority agencies, given principles of only approving the increase corresponding to inputs.

 

Goods and service prices increase in our current economic context partially as a direct result of increased input prices. However, the greater proportion is of deep, underlying reasons such as growth quality, the economy’s competitiveness, capital use efficiency; and demand exceeding supply. In addition, price is also influenced by the world’s price, goods and service demand and supply; and disasters and epidemics.

Price management and valorisation is not the duty of any specific industry, locality or enterprise, but of the whole political system. The measures mainly focus on curbing inflation, stabilizing the macro-economy, and ensuring social welfare, among which the core is to strictly implement measures to reduce supply of the whole economy by cautiously and tightly observing currency policy which has been introduced in Resolution 11.

From now to the end of the year, price floor will be influenced by many factors, which will push up prices. It is very difficult to reach management target set by the Assembly at the beginning of the year. The national economy is affected not only by adverse fluctuations of the world’s market (increasing inflation in many countries; fuel and input material price; the world’s food price continuing to increase; crisis in Middle East and North Africa), but also by internal impacts, weaknesses and unsolved outstanding issues (from adjusting exchange rate, price according to market mechanism, adjusting salary; consequences of fiscal, currency loosening policy to prevent decrease, maintain economic growth rate for the past time; disasters; the weather causing negative impacts on production and life).

 

Resolution 11/NQ-CP indicated that the core duty of the Ministry of Finance is to coordinate with ministries, offices and localities to observe fiscal policy tightening, reducing public investment and overspending. The Ministry of Finance is providing detailed guidance for implementation and investigation.

 

Concerning pricing activity, observance of market price mechanism will be engaged to comprehensive implementation of valorisation measures (ensuring balance between supply and demand of goods and services; finance-currency; controlling price forming factors); Take close management on price options, prices of goods and services whose prices are still set by the government; goods and services funded by National Budget for order, production assignment, subsidized commodities, in order not to provide more funds than initial assigned at the beginning of the year to implement those tasks; Control price for activities of taking advantage of exclusive position, exclusive association for unreasonable price increase; Strictly stop registration of prices with unacceptable increases.