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Nation to ease price controls

Update: January, 18/2012 - 09:53
People buy noodles at a price-stabilised market in Uong Bi in the northern province of Quang Ninh. — VNA/VNS Photo Quang Quyet
HA NOI — Transparency and openness were considered prerequisites for the State to manage the prices of essential commodities such as electricity and petrol, Minister of Finance Vuong Dinh Hue has said.

During an online dialogue on the Government's website yesterday, Hue emphasised that transparency and openness should be focused on both authorities' policies and businesses' information.

In response to a question posed by Vo Minh Tam of Ha Noi on the Ministry of Finance (MoF)'s management of prices for essential commodities such as fuel and electricity, he said that via the most recent inspections on electricity and gasoline prices, the MoF had required domestic providers to follow Government Decree 84 and Decision 24 which regulated fuel and electricity prices, respectively.

However, he said that in the near future the ministry would amend Government Decree 84 with the aim of reducing the time for petrol price adjustments following the global price to less than 30 days.

Government Decree 84 allows businesses to adjust petrol prices by up to 7 per cent when world petrol prices fluctuate by 7 per cent over the previous 30 days. When global oil prices are unstable, fluctuating from 7 per cent to 12 per cent, enterprises are allowed to hike their prices by more than 60 per cent of the increase while the remaining 40 per cent is offset by import tax adjustments and the fuel stabilisation fund.

Secondly, the basic petrol prices will be adjusted so that fuel distributors' business results can be calculated in a transparent way, which will prevent the problem of distributors and dealers crying losses even while they earn real profits, he said.

Along with the circular on the petrol price stabilisation fund, the pending Law on Prices would help stabilise the domestic petrol market, Hue said.

The final draft of the Price Law, which was completed by MoF and is in the process of gathering opinions from businesses, associations, international organisations, citizens and relevant bodies, is expected to be approved by the National Assembly by this May.

The State has also requested all State-owned corporations and groups to declare their expenses and production costs. This year, MoF, in co-operation with the Government Inspectorate and the State Audit of Viet Nam, will continue to inspect and audit those involved in the petrol and electricity sectors.

In reply to a question from Do Thi Mai of Ha Noi regarding the impact of a possible increase in electricity prices this year, Hue said that the consumer price index (CPI) would surge in the event of an electricity price hike. For example, if the price of electricity were to increase by 5 per cent, CPI would inflate by 0.369 per cent.

However, he asserted that an increase in the electricity price would help power providers avoid losses and ensure a sufficient supply. Fortunately, when the electricity price increased, the State would roll out policies to support low-income households.

Therefore, a hike in the electricity price would be calculated with the aim of following market principles while restraining inflation to a single-digit level, he said.

Vu Viet Thanh from Da Nang City asked about pricing transfer activities conducted by several foreign invested enterprises (FIEs) and wondered what MoF did to crack down on such activities.

In response, Hue said that during the 2010-11 period, MoF inspected 1,400 FIEs and reduced their losses to VND5.827 trillion (US$277.5 million). At the moment, the ministry was mulling a project on anti-pricing transfers in both FIEs and local businesses. — VNS

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