Vietnam’s price management agencies are attempting to adjust the prices of some essential goods and services, but it is noteworthy that the price management is not as efficient as expected because the price management method adopted is too demanding.
The public agree with the fixing of milk prices because this will help decrease milk prices significantly. However, there are many more concerning issues than increase in price.
Are importers accidentally protected?
If compared with other forms of price registration and declaration, the fixing of ceiling price is considered the most "solid" one to deal with the current massively increased milk prices. However, many experts say that the fixing of ceiling prices for 25 milk products for children under 6 years old does not thoroughly consider domestic production and trade (imports). Clearly, these two activities have very large differences in product components. And of course, management of domestic production activities is much easier because inputs are tightly controlled. How about trade import?
According to an expert in the industry, the calculation of the price of imported milk is not simple because it depends heavily on import prices which are very difficult to control. Each dairy firm of each country has its own standards, trade secrets and technology. Over the time, dairy producers improve the quality of their products by increasing acid DHA, ARA, beneficial microbial probiotics, micronutrients, minerals, vitamins, etc. Accordingly, the prices of those lines can vary up to hundreds of thousands of dong.
Moreover, under the decision of the Ministry of Finance, price method is not based on price common ground, but fixed for each product and for each specific business. According to calculations, domestic dairy businesses offer lower price of 40-50 percent compared to the same product with the same quality which is subject to declining price as the product having a 40 - 50 percent higher price. Therefore, importing enterprises only lose a little.
This expert said that while managers are still confused about input costs, it is impossible to come up with a formula for calculating the basic price for all milk types, let alone the basic price for each milk line. As a result, when leaders declared the price policy, dairy enterprises have little fear because they know that the price managers are plunging into difficulty. This was confirmed on 21st May when the Ministry of Finance issued the list of milk products subject to ceiling price which includes five imported milk product lines no longer circulating on the market in the future. Those are the whole dairy products of Mead Johnson in the ceiling list. Enfamil A +1, 2 products and Enfagrow A+3 will be replaced by the same product line under the new name Enfamil A+1 3600 (degrees) Brain Plus, or Enfamil A +2 360* (degrees) Brain Plus, Enfagrow A+3 360* (degrees) Brain Plus, etc. It is easy to see that businesses are not being sneaky in doing such things. It is even more confusing to decide the ceiling price for products which no longer exist.
Mr Truong Van Toan, Director of External Relations and Legal of FrieslandCampina Vietnam said that the fixing of ceiling price is not in accordance with the law of the market economy. In addition, manufacturers will no longer be motivated to invest in researching new products with superior nutritional formulas to serve consumers.
What is the management direction?
Talking to the press, Mr Nguyen Trong Nghia, Director of Legal Department, Ministry of Finance, confirmed that immediately after the new price stabilisation measures are launched, management agencies have found many ways enterprises use to dodge the law, such as changing sample and weight. To avoid this situation, upcoming regulations will state the cases of weight change compared with dairy products in the ceiling price panel. These products’ ceiling price must be recalculated based on the new weight based on the proportion of old items in the ceiling price panel. In case of changing packaging, design and quality information, representatives from the Ministry of Finance said that these items must be approved by the competent authority to be considered new products which need re-calculating of new maximum selling price. He also confirmed that management agency will control the implementation of ceiling price of businesses regardless how they argue. In the ceiling price panel, the Ministry has eliminated abnormal, invalid and irregular costs of enterprises to make sure that they gain a reasonable profit.
However, this is not how it seems in reality. Economist Dr Vu Dinh Anh noted that the management of milk commodity by fixing ceiling price is very difficult because products are very diverse. Just adding or reducing components will lead to changes in quality and prices accordingly. Therefore, comparing one business’s products to that of other businesses is very difficult. In terms of cost method, only direct importing or manufacturing businesses know the true cost.
According to this expert, responsibility for the management of milk price belongs to the Ministry of Finance. Over the past time, management bodies "loose" management has led to milk price chaos. In particular, the fact that imported milk is sold at price 5 times as high as import price is rampant.
Domestic dairy businesses offering price less than half the price of imported milk with the same quality standards are also tightened and pushed to the risk of lacking resources for re-investment and development. So finally, will the milk market lay a "red carpet" for imported goods?
N.H
Vietnamese
