Regulations on stabilisation fund must control inflation

November 24, 2022 - 08:36
Trần Văn Lâm, a member of the National Assembly Committee for Financial and Budgetary Affairs, speaks to the Việt Nam Financial Times about the necessity of price stabilisation fund regulations to control inflation and stabilise the macroeconomy.


Trần Văn Lâm, a member of the National Assembly Committee for Financial and Budgetary Affairs. Photo

Trần Văn Lâm, a member of the National Assembly Committee for Financial and Budgetary Affairs, speaks to the Việt Nam Financial Times about the necessity of price stabilisation fund regulations to control inflation and stabilise the macroeconomy.

From the perspective of the agency that examines the amended Law on Prices project, what do you think about the draft law submitted by the Government to the National Assembly?

The Law on Prices has been implemented for more than nine years and has achieved many positive results, contributing to macroeconomic stability and inflation control. However, up to date, the Law has revealed certain limits, so it is necessary to make necessary amendments.

In this revision of the Law, I think it is important to clarify and avoid overlapping in regulations on price management between the Law on Prices and other specialised laws. Ministries and branches may stipulate specific issues in their specialised fields related to price management of their respective industries, but they must comply with the general principles prescribed in this Law.

The drafting agency has covered the current issues and included them in the revised content of the Law. The highest goal is to fully institutionalise the Party's policy on developing the market economy with State regulation. Therefore, the Law on Prices must properly and reasonably stipulate the role of State management; clearly define the boundaries, extent, scope and regulatory measures of the State towards the market based on respecting market rules; overcome the negative effects of the market, but on the other hand still has to ensure the right to self-determination and freedom of business of enterprises.

Besides, through discussion, many opinions said that the Law on Prices must protect the interests of consumers but still limit intervention by administrative orders.

There are two opinions on the authority to decide on the list of goods and services for price stabilisation: it can be either assigned to the Government or kept as it is now. What is your view on this matter?

I am the representative of the inspection agency, so from this perspective, I think that the current regulations should be maintained. The issues related to the restriction of the rights of citizens and organisations must be specified in the Law. If you want to change a regulation, you must amend the Law, which is decided by the National Assembly. If authorised by the National Assembly, then it's appropriate that the Standing Committee of the National Assembly is in charge.

The Government's point of view when submitting this draft law is that it assigns the authority to the Government to detail the list based on the principles specified in the Law to increase flexibility in implementation practice. However, the Standing Committee of the National Assembly meets every month, so it can also decide more quickly rather than waiting for the sessions of the National Assembly. Therefore, from the verifying agency's perspective, we think it is reasonable to let the Standing Committee of the National Assembly decide the list.

What is your opinion on keeping or leaving the Price Stabilisation Fund, including the Petroleum Price Stabilisation Fund?

It is true that now there are two different opinions, each of which has certain grounds but must come from reality. We must admit that recently and especially in the past two years, Việt Nam has been very successful in controlling prices and controlling inflation. There are several reasons for Việt Nam's inflation control success, one of which is that we have tools to control prices.

Although we have to amend the Law of Prices to the requirements of reality, the effectiveness of price stabilisation tools implemented under the (current) Law of Prices has been demonstrated in practice with concrete results.

According to world prices, petrol prices were stabilised and not adjusted by too large a margin. The world crude oil price sometimes increased to more than US$150/barrel. If domestic prices are allowed to fluctuate according to world prices, prices of petroleum-dependent goods and services will also fluctuate, causing macroeconomic instability and high inflation. Because of the Stabilisation Fund, petrol and domestic prices are relatively stable as in the past, when the world was in a price storm. The Fund has been playing an important role in stabilising market prices controlling inflation in general, as in the past.

With such success, there is no reason to drop the Fund. Foreign countries also have powerful tools for stabilising prices, such as stockpiles when needed to supply, so we should also keep funds. Currently, the Fund is promoting its effectiveness, and we will keep it. When it loses its role, it will become unnecessary. Therefore, regulations about this Fund should not be taken out of the Law.

The draft amended Law on Prices was submitted to the National Assembly for the first time at this meeting for consideration and comments. The drafting agency is accepting comments for further improvement. Is there any problem in the draft law that you are still wondering about?

I think the draft amended Law on Prices is appropriate. The drafting agency has covered many issues that are said to be 'closing loopholes' in the current Law. However, some issues still need to be considered, calculated and clarified.

For example, for goods of a monopoly nature, with a large impact on economic and social life, it is necessary to clarify the basis and criteria for goods to be included in the list to be quantified and clarified. There are no general provisions, which are easily abused and controversial later in the implementation process.

For example, regarding stabilising textbook prices, we said textbooks should be made monopoly goods based on their huge impact, but the management mechanism is not transparent and clear enough. There are two elements to be considered here; copyright (content) and publishing. Copyrights can be an element of monopoly, but publishing is not. But still, the State can determine the price of a textbook.

This is the first time a bill has been discussed, so it is still necessary to clarify several things and need comments from the National Assembly deputies for the drafting agency to continue to perfect and submit to the National Assembly for approval in the next session. VNS