Pham Chi Lan, a well known economist in Vietnam, and former Member of the Prime Ministerial Research Team has called for the reconsideration of the price stabilization program, because she believes that the program only benefits enterprises, not consumers, especially the poor, and that efforts to stabilize prices may bring instability to the national economy.

Do you think that the price stabilization program, under which enterprises are given preferential loans to store goods and then sell the goods on the market at low prices even when the market prices go up, will “distort” the market?

Yes, I do. Products should be sold at the market prices which truly reflect their costs and values, but distributors enjoy subsidies in order to sell them at the prices lower than the market prices. In this case, the market becomes “distorted”. Those enterprises which enjoy subsidies, sell products at low prices, while the enterprises which cannot enjoy the scheme, sell products at higher prices. This is not an good thing.

Who are the main beneficiaries from the price stabilization program?

Some enterprises, which join the price stabilization program and get preferential loans, some sales channels, for example, supermarkets. Can consumers enjoy benefits from the program? Only the consumers, who go shopping at supermarkets. Meanwhile, only well off consumers go purchasing goods at supermarkets, while the poor people, the majority of population, do not purchase goods at supermarkets.

I think that we should only encourage enterprises to join the price stabilization program if they use money from the fund to purchase goods and bring goods to sell in rural areas, or sell to workers in industrial zones. The state does not need to help medium class and well off people. A 10,000 dong reduction for a bottle of vegetable oil will not have much significance for the people who drive cars worth hundreds of thousand dollar or millions of dollar.

Some experts have highly appreciated the price stabilization program and want to apply the program in many localities. What do you think about that?

I don’t think that we need to continue the program. If we do, we need to design the program in a way so that it really helps the people with low income. I agree with the government’s viewpoint that in the current context of the sharp price increases, it is necessary to support poor people. However, we should think about how we can help them so that the support can go to the right addresses.

You have said that some enterprises that join the price stabilization program, are getting benefits from the program. Meanwhile, they are complaining that they are incurring loss. What do you say about that?

As you may see, a lot of state-owned enterprises also complained about losses. Then they pushed the lending interest rates pushed up. However, at the year-end, they reported big profits and divided the huge profits. I am afraid that the enterprises of the price stablization program also follows the same pattern. If they incur losses, they should leave the program.

Source: Tien phong