Eagle eye on pricing

An iron hand will continue to be put on prices of essential products

The Ministry of Finance (MoF) last week released Document 249/CQLG-TLSX on steel price registration and Document 18038/BTC-QLG on milk price stabilisation which aims to prevent milk and steel firms from increasing selling prices.

“The MoF’s move is reasonable in the current market situation which the consumer price index in December increased 1.98 per cent, the highest level from the beginning of 2010 and inflation is estimated at 11.75 per cent for the whole year, much higher than the yearly average level of 9.19 per cent,” said a MoF representative.

“This is one of the MoF’s efforts to guarantee the balance of goods supply, demand and stabilise the prices and market for the Tet holidays,” he added.

Nguyen Tien Thoa, director of the MoF’s Price Management Department, said there was no reason for enterprises to adjust steel and milk prices higher than registered levels.

Formerly, on December 24 and 29, 2010, Vietnam Steel Corporation and Vinakyoei Steel Limited sent their price registration documents to the MoF, proposing to raise selling prices because of higher costs for materials and labour.

However, under Document 18038/BTC-QLG, after watching for the market situation, the Price Management Department identified that to compensate input costs, in November 2010, these steel trading enterprises already increased their prices two times.

“On the other hand, input costs for steel production such as steel billets, petrol and electricity basically stayed stably untill late 2010,” Thoa said, explaining that was why the MoF asked the two companies to keep steel prices unchanged.

The MoF said the media had reported some enterprises trading milk would raise prices after January 1, 2011.

“However, it is unreasonable to hike the price when input costs have not grown and the State Bank has not adjusted the foreign exchange rate,” said the MoF’s Document 18038.

The MoF’s list of more than 150 companies which must register prices involves eight cement producers, 18 steel companies, five liquefied petroleum gas traders, seven companies providing dairy products for children under six and eight sugar producers.

Firms must register prices when they launch new products or when there is price turbulence in accordance with Circular 122/2010/TT-BTC, which replaced Circular 104/2008/TT-BTC on price stabilisation which took effect from October 1, 2010.

According to an MoF investigation in November, while gas traders registered to decrease gas prices, urea fertiliser trading firms proposed to increase prices to make profits.

“After checking input costs and other factors, we saw there were no reasons to raise fertiliser prices. Therefore, the MoF decided not to allow these trading firms to hike their selling prices,” said Thoa.