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US and European businesses in Vietnam have opposed a recent proposal by the Finance Ministry to impose price controls, saying the move could damage the country's market economy status. "We oppose a return to central planning and government control over normal market-based activity and do not understand why government officials need the authority to allow or disallow prices changes," said the American Chamber of Commerce.
The chamber is concerned that if the proposed circular becomes law, businesses will have to disclose their proprietary and confidential information as they are be required to report their pricing.
Such a move would make it very difficult to convince US government trade officials that Vietnam is becoming more market-oriented, the chamber noted.
Vietnam currently limits imposing price controls to state-owned enterprises only. But the draft circular announced by the Finance Ministry last month proposes setting price controls on a wide range of goods, requiring all businesses in the country to report on production costs, expenses and also profit margins.
If an enterprise fails to comply with the provisions of the draft circular, it could face various sanctions that may include having its business license revoked.
The proposed circular was inconsistent with the principles underlying Project 30 because it imposed new administrative burdens on enterprises in several sectors, the European Chamber of Commerce, or Eurocham, said in a statement.
Project 30 is a campaign launched by the government aiming to cut 30 percent in administrative procedures in Vietnam.
"The proposed circular may also give rise to serious issues regarding to WTO commitments, Vietnam's market economy status, in export markets, and a health domestic market-oriented economy," Eurocham said.
As a result, the two chambers said the government should not approve the proposed circular or businesses and consumers would suffer.
The draft circular is now open to public review and consultation, until February 22. Under its commitments to the World Trade Organization and the US-Vietnam Bilateral Trade Agreement, Vietnam has agreed to allow parties affected by proposed legal instruments to provide opinions.
According to the Finance Ministry, the proposal aimed to fight rising inflation in Vietnam.
Price adjustments must be reasonable, said Nguyen Tien Thoa, head of the ministry's Price Management Department.
Vietnam is facing economic challenges, which would affect on prices. Economists said the most significant challenge for Vietnam's economy this year was high inflation due to rising commodity prices and the delayed effects of a stimulus package last year.
Consumer prices rose 6.5 percent from a year earlier last month, the most since April, as food prices increased and domestic demand picked up. The government set a target for inflation of 7 percent this year. The rate will exceed 10 percent in 2010, the International Monetary Fund forecasts.
Myron Brilliant, senior vice president for international affairs at the US Chamber of Commerce in Washington, on December 15 wrote to Vietnamese officials and said the plan to impose price controls "will make it difficult for [US] companies to operate with predictability in Vietnam."
"It will also serve as a disincentive to new direct investment in Vietnam," Brilliant said in the letter, which was cited by The Wall Street Journal.
Brilliant said the measure, if implemented, also "will impose significant new reporting and administrative burdens on enterprises throughout the production and distribution chain."
Source: Thanhniennews
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