Price ceilings for milk set to end next year

Hanoi (VNA) – The Ministry of Finance expects to float the price of milk products for children under six years old by the beginning of next year after the price ceilings for the products are eliminated.

Deputy Prime Minister Vo Van Ninh was quoted by online newspaper dantri.vn as saying that Vietnam could no longer use administrative solutions in the market, since the country has signed a range of Free Trade Agreements (FTAs).

The management agencies had been set up to assure markets remain stable. In the future, markets could maintain their stability through the use of improved management and economics measures, he added.

Meanwhile, Dinh Tien Dung, Minister of Finance, said that by the end of this year the decision to put in place price ceilings for milk products for children under six years old would have expired.

Officials have also considered economic solutions, in a bid to manage milk prices under market mechanism, Dung said.

Economists also agreed that the use of price ceilings for some products relating to health and nutrition for children should not be maintained over a long period.

Cao Si Kiem, Chairman of Vietnam Small-and-Medium Sized Enterprises, said price ceilings should be removed when the market has abundant supply.

Commenting on this idea, Tran Du Lich, a member of the National Assembly Economic Committee, said controlling milk prices has caused difficulties for the Government in creating policies. In addition, it has been unfair to businesses manufacturing at different scales.

The price ceilings were put in place in May 2014 under Decision No 1079/QD-BTC enacted by the ministry. At the end of the second quarter of 2015, the ministry issued the Decision No 758/QD-BTC to continue imposing the price ceiling through the end of this year.

Research about the milk market in 2015 was carried out by Nielsen in Hanoi and HCM City, and indicated that milk products for children less than six years old were reduced 10 percent and 9 percent in terms of quantity and price, respectively against the previous year, after enacting the price ceiling.

Several milk businesses said their sales of powdered milk last year were also lower than the previous year.

Nielsen noted that milk prices in Vietnam have been no higher than prices found in the middle group in Asia.

Its statistics in July 2015 revealed that average milk prices in the high end segment in Vietnam were similar to those in other countries in the region, such as Malaysia, Thailand and Philippines.-VNA