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Vietnam gov't eyes price ceiling on milk products

Publication Date : 02-05-2014


The Prime Minister of Vietnam has approved the Ministry of Finance's proposal to impose a price ceiling on milk products for children due to the rising prices of the products in the domestic market.

This is seen as a way of controlling the prices of milk products in the future, the ministry said, after it completed a month-long investigation of milk prices and the local milk market.

Following a directive by the Prime Minister, the Ministries of Finance and of Industry and Trade investigated the price regulations and taxes on five milk producers and traders from March 10 to April 10. These firms were the Vietnam Dairy Joint Stock Company (Vinamilk), 3A Nutrition (Vietnam) Ltd Company, Nestle Vietnam Ltd Company, Friesland Campina Vietnam Ltd Company and Mead Johnson Nutrition (Vietnam) Ltd Company.

According to results of the investigation which were released on Tuesday, these companies have increased their prices of milk products for children less than six years old during the first three months of this year. Five of them increased their prices by 2.4 per cent to 30.66 per cent over year ago level, while two of them raised their prices by 5 per cent to 14 per cent.

The finance ministry has asked these firms to comply with regulations requiring the listing of prices of milk products for children less than six years of age.

The companies must review and save business costs because spending on advertising, discounts and marketing, which are part of the business costs, exceeded the regulated level under the Law on Corporate Income Tax for milk products for children in the said age group.

The high spending on these activities forced the prices of milk products up by 2.18 per cent to 16.39 per cent, the ministry said.

They must also review the prices of the said products to ensure that they were commensurate with the spending and profit made on the products, it said.

The ministry said at the government's monthly meeting on Tuesday that the government agreed with the finance ministry's proposal on applying a price ceiling on the said milk products. Additionally, these firms must register the prices of these products with the state offices, as per the existing regulations.

These solutions, which would be applied for the first time, are expected to stabilise the prices of milk products for the time being, the ministry said.



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