Vietnam will allow a wider market mechanism in deciding prices of key commodities in the country in 2007, Prime Minister Nguyen Tan Dung has pledged at the ongoing parliamentary meeting in Hanoi.
“In 2007, relevant bodies must take prompt actions in outlining policies and implementing suitable roadmaps for price management over essential commodities under the market principles, but with the appropriate State intervention,” Dung said before law-makers last week.
This mechanism will enable State-run giant firms to raise their adaptability in the global integration and reduce State subsidies over the sales of key commodities, he stressed.
Accordingly, next year, cement, steel and fertilizer products will be sold at the market price, especially when foreign investors have a wider penetration in these industries.
Meanwhile, the government will considerably reduce state subsidies for oil sales from 2007.
The Ministry of Trade said that the price of petrol will be based on the market mechanism from this year’s end. The State coffers will not subsidize this product soon, it added.
The government will cut subsidies for sales of oil products and will put subsidies to an end by the end of 2008, the ministry noted.
With the subsidy, the petroleum fee collection has been shrunk for many years, the Ministry of Trade, elaborating that the fee was VND146 billion lower than the collection estimation in 2003, VND282 billion in 2004, VND207 billion in 2005 and estimated VND581 billion in 2006.
Notably, the government can possibly raise the price of coal and electricity, which have been kept unchanged for many years to make compensations for the soaring price of other key commodities and services.
The subsidy for sales of coal will be removed in 2007, except for coal to fuel power generation. As a result, coal price can be uplifted to ensure profitable operation of coal firms.
However, the adjustment of electricity price will be further discussed by the National Assembly, the law-making body, before a concrete roadmap is worked out, according to the Ministry of Planning & Investment.
Prices of many key commodities will increase next year on the high global levels, the ministry forecast. “This is a challenge for CPI control,” it said.
The government’s forecast showed that the CPI will rise 7-7.5 per cent this year, lower than the expected GDP growth of 8.2 per cent.
In 2007, the GDP growth is expected at 8.2-8.5 per cent and the CPI rise is lower than this year’s forecast.
MPI
Vietnamese
