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.

Source: VietNamNet/Viet Nam News