Deputy Minister of Finance Talks Price Controls

Enterprises that receive reductions in import duties but do not lower prices of their products will be punished, Deputy Minister of Finance Tran Xuan Ha told a Sai Gon Giai Phong Newspaper reporter yesterday.

Deputy Minister of Finance Tran Xuan Ha

Reporter: The recent reduction of import duties on some commodities cost the State budget VND1 trillion (US$62.5 million) in income. How will the tax reduction help ease the price increase?
Deputy Minister Ha: The cut in import duties on some commodities was essential. It could help importers balance the volume of goods for a whole year and so has eased worries of consumers as well as businesses concerning rising goods prices.

Regarding a concrete measure to cool the price rise, we still have to keep watch on the situation.
How should enterprises that don’t lower prices of those products be dealt with, particularly when they have the right to fix prices?
The reduction in import duties was aimed to allow enterprises room to lower their prices – if they do not follow suit, they will be punished. They have to recalculate expenses and costs with the new duties, and adjust their prices accordingly.
The ministry has already assigned a team to check the implementation of price policies at firms and economic groups dealing in steel, gas and milk.
The examination will be conducted through the end of the year.
How about prices of oil and petroleum?
We will work with the Ministry of Industry and Trade on this issue. We think a cut of VND500 per liter of petrol is reasonable.
Petrol prices will be reduced within the week. The Prime Minister has agreed to postpone the increase in oil prices which was ratified in the route map.
In the third quarter, we will discuss measures to reasonably adjust prices of some major materials such as electricity and coal used in production of cement, phosphate and writing-paper, bus tickets, and clean water.
We will also work with the Ministry of Information and Communications to cut prices of telecommunication services and some other products and services.
Though the price increase of some commodities has been delayed, it still will have to be done to be in line with the route map. So will prices of those commodities be increased later even if the price index still rises?
For the time being, the process of implementing the route map of the market price mechanism applied for essential commodities such as electricity, coal and oil has been extended. I think prices will be adjusted for an increase in the beginning of next year.
What did you mean when you said the recent price increase should be paid attention to but not worried about?
In the previous instance, the consumer price index soared but it was still in control. It is important that the index is lower than the gross domestic product (GDP). Causes of the price rise should be identified properly to determine correct solutions to the matter. We should not be so worried.
The State Bank of Viet Nam has just spent over VND100 trillion buying US$7 billion. Was that a big cause from the bank of the increase in inflation?
We should look at both sides of monetary circulation, which involves spending and collecting money. The two methods are conducted at the same time. Solutions of collecting money like the issuance of treasury bills and bonds and the expansion of transactions on the open market are also very important.

At a press conference yesterday, leaders of the ministries of Finance, Industry and Trade, and the State Bank of Viet Nam announced measures to reach a GDP growth rate of 8.5 percent and rein in the rise in the consumer price index (CPI) to less than that of GDP.
Deputy Minister of Industry and Trade Le Danh Vinh said that in order to control prices, the ministry has decided to delay the raise of electricity prices for one year. Accordingly, prices will be raised from VND842 per kWh to VND890 on July 1, 2008. A raise in coal prices has also been postponed.
Nguyen Xuan Phuc, minister and chairman of the Government Office, stressed that the CPI is still in control.
He said the Government will take economic and administrative measures to keep prices stable and prevent a price hike.

Related articles:
PM Proposes Bold Measures to Control Inflation
With Duties Cut, Prices to Go Down: Deputy Minister of Finance
PM Adopts Measures to Curb Price Increases
Deputy PM Calls for Urgent Price Controls

By staff writers – Translated by Yen Chuong

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