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Firms fret over draft dairy price management circular

Vu Yen
Thursday,  Apr 20,2017,23:48 (GMT+7)
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Firms fret over draft dairy price management circular

Vu Yen

A shopper walks past the canned milk section at a store in HCMC. Businesses have pointed out a number of difficulties which they would face if a draft circular on management of prices of dairy products is approved in its current form - PHOTO: THANH HOA

HCMC - Businesses have pointed out a number of difficulties which they would face if a draft circular on management of prices of dairy products for children under six years old and functional food is approved in its current form.

Speaking at a meeting on the draft circular, organized in HCMC on Tuesday by the Ministry of Industry and Trade, Arnaud Renard, chairman of the Nutritional Foods Group at the European Chamber of Commerce in Vietnam (EuroCham Vietnam), described Vietnam’s removal of the ceilings on dairy goods prices as a rational move.

However, the draft circular prepared by the ministry runs counter to the Pricing Law, said Renard, who is also general manager of Fonterra Brands Vietnam. 

The Pricing Law specifies that for pricing decisions, businesses will have to send a notice to the relevant agency. But the draft circular effectively requires dairy firms to ask for permission for their pricing decisions.

If their price adjustment plans sent to the relevant agency are not approved, enterprises would become helpless, he said, and this is a form of State interference in businesses’ decision making.

Nguyen Loc An, head of the ministry’s domestic market department, which is responsible for drafting the circular, said the department had strictly referred to the Pricing Law and the guidance documents for the law’s execution.

“Under Government Decree 177/2013 guiding the implementation of the Pricing Law and Government Decree 149/2016 providing additional regulations on milk for children under six years old, the Ministry of Industry and Trade has full power (over pricing matters),” said An.

He added the two decrees allowed the Ministry of Finance to issue price declaration forms and provide guidelines for price declarations. The Finance Ministry’s Circular 56/2014 and Circular 233/2016 stipulate that enterprises might be requested to explain their pricing policy.

If their explanations are found to be unreasonable, they could not make any price changes.

An official at the HCMC Department of Industry and Trade said dairy price adjustments by up to 5% must be reported to the relevant State agency. Even if prices are adjusted piecemeal within a certain period of time and the total change is over 5%, firms must also declare their new prices under the draft circular, the official noted.

Regarding consecutive price change, a representative of Vinamilk, the country’s leading dairy processor, said the draft circular should make clear when the term “consecutive” applies; whether it is consecutive in six months, one year or two years remains unclear.

The price caps on dairy goods for children aged under six were gone in late March. But the Ministry of Industry and Trade has replaced the Ministry of Finance to manage dairy goods prices.

The Ministry of Industry and Trade is gathering comment on the draft circular on management of prices of dairy products for children under six years old and functional foods.

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