Gov’t to keep close eye on price hikes

The recent rise in the cost of essential commodities such as electricity, petroleum and coal has significantly affected the socio-economy. Director of the Ministry of Finance’s Pricing Department Nguyen Tien Thoa talked about its impacts and Government measures to control it.

After approving an increase in the prices of electricity and petroleum in March, the Ministry of Finance also allowed coal prices to increase by 20-40 per cent at the start of April. How do you assess the influence of these price hikes on goods such as fertiliser, paper and cement?

We managed to stabilise the cost of coal for over a year, but a surge earlier this month was unavoidable because input costs have gone through the roof. Fertiliser, paper and cement producers currently pay a lot less for coal than in the domestic and export markets. Under a Government recommendation, these industries should buy coal at roughly 90 per cent of the export price, which would equate to an overall increase of 39.5-67.

We managed to contain it at 20-40 per cent, depending on the type of coal, which meant production costs for the cement and paper industries only increased by 5.7-6.4 per cent and 3.5 per cent, respectively. Fertiliser production is slightly more expensive and costs have increased by between 6-18 per cent.

However, corresponding retail prices also depend on other factors including purchasing power, consumption demand and competitiveness.

Petrol prices have shot up by VND4,300 per litre for the past two consecutive months and world oil prices are continuing to rise. Will management agencies approve another price hike if retailers ask for it?

We still have to import petrol mainly for domestic use so domestic prices of course depend on world prices. As the Government adjusts petrol prices in accordance with the market mechanism, prices will increase when the world price increases, and vice verse.

The domestic petrol price is currently still roughly half that of the world price because the State exempts import duties and provides free interest rates for petrol importers

If the world price continues to surge, domestic petrol traders will be allowed to increase their retail prices, but the period between consecutive price increases must be at least 30 days.

However, if the world price decreases, we will resume import duties and consider a retail price reduction.

The increasing cost of essential commodities has had a negative impact on the socio-economy. What measures are being taken by the Ministry of Finance to curb costs?

The Ministry of Finance has asked People’s Committees nationwide to closely supervise price control and stabilisation measures.

The ministry is also trying to ensure that the laws on prices, taxes and fees are adhered to.

We, together with relevant ministries, branches and localities, have organised inspections at 24 enterprises which produce and trade goods and services subject to the Government’s price stabilisation programme, such as construction steel, cement, liquefied petroleum gas, milk, sugar, fertiliser and animal feed.

Inspections have also been carried out at a number of businesses that produce and trade pesticide, veterinary medicine and paper, following recent price hikes.

Obviously we will consider rising input costs, but we want to avoid cases of unreasonable price increases.

The Ministry of Finance will continue to monitor the situation and carry out inspections in order to ensure this.

It will also apply measures to help businesses cut production costs including scrutinising current taxes and abolishing unreasonable fees.

We will also look at social security policies for poor and low-income earners and corporate income tax extensions for small- and medium-sized enterprises. — VNS

Tags: Vietnam 2011 inflation, Vietnam economic, Vietnam economy, Vietnam inflation