The head of the Ministry of Finance’s
price control department, Nguyen Tien Thoa, spoke to Tin tuc (News) about
measures to curb the prices of essential goods and stabilise people’s living
standards.

What measures is the Ministry of
Finance taking to curb prices of necessities for production and daily life?

Under Government Resolution No 11/NQ-CP
issued in February to curb inflation, the ministry asked municipal and
provincial People’s Committees to improve price management. The localities are
boosting price inspections and reporting, control price-forming factors,
releasing information to the public about pricing violations via mass media, and
tightening State budget spending. The ministry has asked agencies from central
to local levels to cut 10 per cent of recurrent expenditures for the last nine
months of this year.

The ministry has co-operated with relevant
ministries and authorities to inspect the implementation of price regulations in
24 firms with price-stabilised products, including steel, cement, fertiliser,
animal feed, milk and sugar. We are also to inspect firms producing pesticides,
veterinary medicines and paper.

The ministry will continue to take measures
to ensure market-regulated prices and minimise the impact of market prices on
socio-economic development. Additionally, social welfare will be also improved
through support policies for the poor and low-income earners, and extending tax
payment times for small- and medium-sized enterprises. The ministry also has
other measures to help firms reduce production costs, including simplified
administrative procedures and reduced tariffs and fees.

In the past two months, domestic
petrol prices have risen VND4,300 per litre. How is the Government working to
control the price?

Viet Nam still imports fuel to meet
domestic demand, so domestic prices depend on the world prices. Normally, when
regulated by market mechanisms, the fuel price is adjusted in line with market
movements. The increase in world prices leads to an increase in domestic prices
and vice versa.

Domestic fuel prices have been increased
twice recently, but the increase was just 40-50 per cent of the adjusted price
thanks to the Government reduction of import taxes to 0 per cent.

So, if world prices rise, making basic
price higher than the current price for 30 days, the domestic price will be
increased to ensure smooth operation for petrol distributors and dealers. High
buying prices and low selling prices can weaken these firms’ financial capacity
and lead to an increase in cross-border fuel smuggling. If, during the same
period, the basic price is lower than current price, the import tax will be
restored and retail fuel prices could be reduced.

The ministry has approved a proposal
by the Vinacomin Group to increase coal prices by 20-40 per cent this month. How
will this impact the prices of other commodities dependent on coal, e.g.,
fertiliser, paper and cement?

After stable coal prices for the past year,
coal enterprises have to increase prices because price-forming factors have
changed, making their coal prices much lower than either domestic market and
export prices. This is force majeure. However, the adjustment has not met the
Prime Minister’s direction that the domestic coal price should be 90 per cent of
the export price and must be 39.5-67 per cent higher than current prices.

The newly-approved increase in coal price
will increase cement costs by 5.7-6.4 per cent, paper costs about 3.5 per cent,
phosphate fertiliser costs 6-6.4 per cent, and nitrogenous fertiliser costs
15-18 per cent. Whether retail prices will increase proportionally depends on
such factors as market price, purchasing power, demand, competitiveness and the
efficiency of firms in reducing production costs.

VietNamNet/Viet
Nam News