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Milk product price cap sought
A proposal by the Department for Taxation Policy calls for a price cap on milk products to control price fluctuations.
Under the draft proposal, the specific price for milk products would be based on regional retail prices, including container costs. Businesses breaking the price cap would be fined VND15 million (US$830) plus the difference in revenue earned from the increase.
The department wrote the proposal due to the unreasonable prices of milk products in the domestic market which occurred after the Government reduced import taxes on milk by 50 per cent and the cost of milk powder on the world market dropped.
The proposal points out that milk is among 14 categories under the Gov-ernment’s price stabilis-ation plan. However, the domestic price continues to increase.
Because there has not been a consecutive 20 per cent increase within 15 days, the Government can not intervene regarding pricing regulations.
The Ministry of Finance and the General Department of Taxation previously co-operated to evaluate the input costs among milk businesses and called for price stability. However, the situation seemed unchanged. According to the Viet Nam Standards and Consumers Association, the price of imported milk powder products in Viet Nam is 20 to 60 per cent higher than in other regional countries such as Indonesia, Thailand and Malaysia.
Deputy Minister of Industry and Trade Le Danh Vinh said that a price cap could be applied according to the law of Viet Nam. "I agree with the solution," he said.
Head of the Viet Nam Chamber of Commerce and Industry’s Legal Department, Tran Huu Huynh, expressed his concern that the proposal might raise objections from milk businesses and some other parties because there was no proof of price distortion.
According to Huynh, the legal framework in Viet Nam does not support investigations of price fixing between businesses.
"However, an unreasonable milk price is a signal. It is quite a feasible measure to protect consumer rights at this time," he said.
Opinions from milk businesses haven’t been optimistic. "It’s not feasible," said Director of Hanco Food, Pham Ngoc Chau. "It is normal for different products to be offered at various prices. It’s not easy to set a price cap".The draft did not mention the deadline for registering the price cap and the conditions for adjusting the cap level for powdered milk. Meanwhile, milk prices fluctuate monthly.
"It will be very difficult for businesses if the price cap is not adjusted properly," said Chau.
Director of Nutifood, Nguyen Thi Lan Huong, said the proposal would be tough for managing departments because high prices was not the main purpose of business - the sale was.
"I think they should leave the market to rule itself," said Huong.
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