Move sparks hot words

Unclear technical regulations are set to hinder enterprises and state management adapting to the new price registration reality.

According to Circular 122/2010/TT-BTC on price stabilisation, from October 1, 2010 all enterprises, including private enterprises, are required to register their prices. Seventeen goods and services, including petrol, cement, construction steel, liquefied petroleum gas, milk, fertilisers and livestock feeds will be subject to price registration.

Milk is one of a basket of goods subject to price registration

However, European Chamber of Commerce (EuroCham) executive director Dr. Matthias Duehn said on a technical level, Eurocham believed that Circular 122 was drafted in a way that would create uncertainty in the business community.

For example, he said, the circumstances of “abnormal fluctuations” of prices were vaguely drafted in Circular 122, leaving a very broad discretion for state authorities. This may result in inconsistent application of Circular 122 in practice.

Under Circular 122, Article 2, Section 2.1 regulates that the competent authorities will proclaim to apply price stabilisation measures in case that the domestic market prices of the goods and services included in the lists of goods and services to implement the price stabilisation have abnormal fluctuations.

“Further, the term ‘policies, economic and technical norms and regulations on price calculation issued by competent authorities’ is used in various places in Circular 122, but it is unclear what are these policies, norms and regulations,” Duehn told Vietnam Investment Review.

He said subjecting all participants in the market to follow the same set of norms in price calculation and consequently profit determination was unreasonable because this requirement did not take into account that companies might accept different risks in carrying out their businesses.

Under Circular 122, in addition to the prime minister, the Ministry of Finance (MoF), other relevant ministries and provincial people’s committees are entitled to stipulate and apply additional price control measures in their locations. 

“This will potentially lead to overlaps between the powers and authority of the central and provincial authorities. Granting authority to apply price control measures to a local people’s committee may also create inconsistent practices in different locations in respect of the same goods or services,” said Duehn.

“Also, there is no requirement on how long in advance businesses must register their price [changes] and there is no time limit for state authorities to respond to the businesses on their registration files. The lack of a deadline to respond to registration files leave the businesses in great uncertainty as at any time the state authorities may come back and challenge the registered price,” he added.

Finally, he said, Circular 122 did not provide for any obligation on the part of state authorities involved to keep information supplied by businesses for the purposes of price control confidential.

Meanwhile,  MoF Price Management Department deputy director Nguyen Anh Tuan refused to comment on this issue. “After the effective date of this circular, we will gather all feedback from business community and related organisations and answer them later,” Tuan told Vietnam Investment Review last week.

Previously, when Circular 122 was still a draft, it  raised many fierce protests from the foreign business community as a backward step in Vietnam’s market development. The Ministry of Finance,  affirmed many times that the price registration did not violate international integration commitments, fully complied with World Trade Organization’s regulations and Vietnam’s reality and legal frameworks.