Experts distrust new circular on price stabilization
The new circular to deal with stabilizing the price of children`s formula products is not gaining much support from local traders and economists who doubt its effectiveness.
The newly-issued circular by the Ministry of Health will take effect from November 20.Previously, firms have taken advantage of legal loopholes and classified formula products, intended for children under 36 months old, as food supplements to avoid price stabilisation policies. All these products will again be classified as milk according to the proposals of the new circular. Liquid milk will also be put under the same controls.
Tran Quang Trung, head of Vietnam Food Administration under the Ministry of Health, said they are only responsible for issuing the list of products. The prices will be under the management of the Ministry of Finance.
Since 2007, prices of dairy products have increased 30 times. While customers made complaints about unreasonable price hikes, the Ministry of Health and the Ministry of Finance blamed each other.
Previously, the Ministry of Health said expensive dairy products are not a new issue and the public cannot blame the classification process for this. On the other hand, the Ministry of Finance affirmed that it's a huge loophole for firms to take advantage of.
Many customers place hope on the new circular, however, experts have raised doubts over its effectiveness.
"In 2008, the Ministry of Finance issued a circular in order to control milk prices. It stated that for 15 days, firms were not permitted to raise prices more than 20% of the current price. The maximum percentage was too high and the adjustment time was short so the circular made no impact at all. Clearly, the problem is with our regulations, not the names of the products." an expert said.
Vu Vinh Phu, president of Hanoi's Supermarket Association, also said direct duties and responsibilities are not specified in the current regulations. "Why can't we investigate the operations of foreign as well as domestic firms to find the key products and their prices?" Phu said. According to Phu, the new circular is good but not strong enough to deal with milk price problems. "It's the fault of the management agencies."
Economist Nguyen Minh Phong said the Ministry of Industry and Trade should also take some blame because it's the market manager. The problem is not milk quality but monopoly and competitiveness in the market. He went on to say that people should not place too much hope on the new circular because even prices of milk products that are on the price-stabilisation list still increase over time.
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