In addition, price regulation and management will be based on market principles under the State administration. There will be a roadmap drawn up to adjust the prices of a number of goods and services whose prices the State has set.

These comprise electricity, coal, land and important natural resources, among others. Policies will be further improved in an effort to gradually offer prices based on service quality in health care and education sectors.

Another central task set for 2011 will be to increase inspection and auditing of public fund management and usage, as well as loans and advance spending made by State-owned companies.

What are your concerns about inflation?

It is forecast that the global economy will continue to rebound in 2011, yet at a slower pace than last year. Economic growth coupled with still rising demand for raw materials will cause prices to edge up.

Additionally, international trade will continue to grow by 7 per cent (however, the figure remains lower than the 11.4 per cent increase in 2010). Therefore, market prices are still on the upward trend, but at a slower speed than last year's.

Locally, the economy will bounce back rather quickly, regaining a growth rate in the wake of the global economic crisis (the targeted gross domestic product is for 7-7.5 per cent growth against 2010).

Thus, the demand for raw materials to meet production activities will go up. Nevertheless, inherent shortcomings of the economy that are yet to be radically handled and could contribute to inflation include economic structure, quality of growth, import surplus, balance of payment, high overspending, the efficiency of capital utilisation and infrastructure facilities.

Natural disasters, epidemics and unpredictable climate change are most likely to affect the economy, particularly agricultural production and people's lives.

Given these difficulties facing the national and international economies, the Finance Ministry has put forth six specific measures to realise the target of controlling "consumer price hike of no more than 7 per cent" formulated by the National Assembly Resolution. The measures include reinforcing production, business and investment, exports; ensuring growth and a balanced supply and demand of goods to avoid short supply; planning the goods supply system, especially for essential products, as directed by the Prime Minister.

Other proposed measures are related to fiscal policies, revenue spikes, reduced overspending and capital mobilisation via Government bond issuance at reasonable interest rates.

At the same time, the roadmap to cut tariffs as part of the WTO entry commitments will be implemented, and improper fees will be examined and removed. For petroleum goods, we will continue to employ stabilisation funds, fees and taxes to control prices.

What measures will the ministry take in regards to most essential goods?

Several measures have been discussed, including continuing to reform the price management mechanism in a market-based manner. That is, prices will be regulated by the market.

We respect the right to set the price and compete in prices among production and business organisations and individuals by compiling a law on pricing replacing the pricing decree. At the same time, we will amend and supplement government resolutions on price evaluation; penalties for violations concerning pricing; and the mechanism to set prices in particular fields.

As well, active measures will be taken to effectively predict the market and prices at home and abroad. Measures to stabilise prices will be deployed and implemented. One of this year's tasks is to actively proceed with the roadmap to adjust prices of a number of commodities and services in line with the market price mechanism under the State management at a suitable time of the year.

Currently, the State sets the prices for electricity, coal, clean water, land, important natural resources and assorted services, among others. Nonetheless, the market-based price roadmap must be closely associated with improving the goods and service supply system.

Will petrol prices abruptly soar following any price-hike decision, given that petrol prices have been controlled for a long time and businesses have suffered heavy losses?

To curb inflation in 2010, the State employed financial instruments to stabilise prices for a number of essential input raw materials (electric power, coal for power generation, and petroleum). Thus, prices of some of these goods will not be fluctuating strongly.

The plan to pursue the State-administered market economy is consistent. Prices of goods and services need the market-based mechanism under the State management. However, to minimise adverse effects to the economy and people's lives, it is necessary to follow a roadmap, execute it at a suitable moment, and avert unexpected price hikes.

Source: VietNamNet/Viet Nam News