Price registration is here

The government’s draft decree on pricing administrative sanctions last week appeared on the Ministry of Finance’s website seeking comments.

The draft, if approved, will replace Decree 169/2004/ND-CP prescribing the sanctioning of administrative violations in the pricing domain and certain provisions of Decree 107/2008/ND-CP on administrative sanctioning of goods speculation and hoarding, excessive price hiking, rumour spreading, smuggling and trade fraud.

Cement falls into the price registration category

It also supplements content on price registration, declaration, calculation rules and raising fines for some other violations.

James Lockett, special counsel of Baker and McKenzie Vietnam Law Firm, said the draft decree reflected the new regulations under Circular 122/2010/TT-BTC on price stabilisation, effective from October 1, 2010. 

“This draft is indeed an indication that the government intends to enforce the new pricing circular strongly. Beside the fines, non-compliant enterprises may be subject to additional sanctions, including revocation of the certificate of satisfaction of the business conditions,” Lockett told VIR.

Under Circular 122, all enterprises, including private enterprises, are required to register their prices. Seventeen goods and services, including petrol, cement, construction steel, liquefied petroleum gas, milk, fertilisers and livestock feeds will be subject to price registration.

However, Circular 122 raised many fierce protests from the foreign business community as a backward step in market development in Vietnam.

      “It is significant that some of the fine levels provided in the draft decree are double those provided in existing regulations,” Lockett said.

Accordingly, failure to list prices is subject to a fine between VND 500,000 and 2 million from a fine between VND100,000 and 200,000.

For failure to report or report without complying with regulations while the State conducts price stabilization measures, the fine level is in the range of VND10 million to 15 million against the previous fine of VND5 million to 10 million. For failure to implement or incorrectly implement price stabilization measures provided by the competent authority, the fine level is from VND15 million to 20 million against the previous level of VND5 million to 10 million

Dr. Matthias Duehn, executive director of Eurocham, said under Circular 122, businesses in Vietnam would be face, from October 1, more and new price registration requirements for various prices of their products, including import, trading, retail and suggested retail prices.

Duehn told VIR last week that passing Circular 122 was against the spirit and objectives of the government's ambitious and successful Project 30 to simplify administrative burdens by 30 per cent by the end of this year (Project 30). “Contrary to Project 30, Circular 122 is likely to add unnecessary administrative burdens and uncertainty to the private sector doing business in Vietnam. This will eventually increase the cost of doing business for our members in Vietnam, and thereby make Vietnam less competitive as an investment destination.

“We note that the passing of Circular 122 may also affect the European Union’s assessment on Vietnam’s early graduation to “market economy status” under EU rules because the first principle of price stabilisation is to let the market stabilise the price based on the rule of ‘supply and demand’,” he said.

Meanwhile, the Ministry of Finance affirmed many times that the price registration did not violate international integration commitments, fully complied with World Trade Organization’s regulations and Vietnam’s reality and legal frameworks.