Consumers left out of price law proposal

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The proposed law on prices as currently written has raised concerns among business groups about more controls on pricing. In addition, experts complain that the new law is not beneficial to consumers.

The Price Law should protect consumers because in the end they are the ones most affected by rising prices, said Nguyen Minh Phong of Hanoi Socioeconomic Research Institute.

The preliminary version, however, does not mention anything about consumer rights. Consumers must have the right to demand pricing information, Phong told a meeting between government officials and experts in Hanoi on Tuesday.

Economist Vu Dinh Anh of the Institute of Market and Price Research said the proposed law addresses many issues concerning retailers, producers and the authorities, but it has left consumers out in the cold.

"When I buy a home, for example, I should have the right to have the property evaluated instead of just accepting the price claimed by the seller," Anh said. "This draft has forgotten the important role of consumers."

This version of the price law is expected to be presented to legislators for discussion this July; it stipulates that the government will take necessary measures to control prices and keep them stable. The government will stop determining prices of most products and services while businesses will be required to register, list and publicize their tariffs.

Anh said the so-called price stabilization efforts of the Vietnamese government have not proved effective so far. Power and fuel prices, for instance, continued to rise this year.

Legislators doubted the legality of price stabilization funds set up by the government last year, but more such funds have been proposed, he said. "I can't imagine where the market is headed when there are so many "˜stabilization' funds." Anh said.

Dinh Sy Dung, a legal official at the Government Office, said producers are supposed to take initiative in keeping their prices stable, but many price stabilization funds in Vietnam are now using money from the state budget.

If the funds are not managed properly, they will not benefit consumers, Dung said.

On the business front, the price law has sparked an outcry among foreign business groups.

The reaction is not a surprise. Last year, foreign companies fought hard against Circular 122, which allows local authorities to impose price control measures and obliges 150 companies to register their prices. Some said the rules were a violation of Vietnam's WTO commitments.

EuroCham, a group of European companies, said at the Vietnam Business Forum in Hanoi late last month that it fully understands the need to keep inflation under control, but the new price law is "again drafted in a way that will create uncertainty in the business community."

"Also, the price law does not explicitly obligate state authorities to keep information supplied by businesses, for the purposes of price control, confidential," EuroCham said, noting that passing the law will result in "heavy additional administrative burdens" for companies.

Manufacturing and Distribution Working Group, which comprises leading law firms in the country as well as local and foreign companies, said at the business forum that investors are "frightened" about the prospect of a new price control law.

"We have seen investors shelve their proposed investment projects in cement and milk just because the price controls make the outcome of the investments too unpredictable," said head of the working group Fred Burke, managing partner of Baker & McKenzie.

"If this continues, it will only create more dependence on imports and exacerbate the market"˜s price pressures," he said, adding that the prospect of having to file input production costs with every authority is unreasonable.

"We beg careful reconsideration of this and other aspects of this important area of law," Burke said.

In a report published Wednesday, Saigon Tiep Thi newspaper cited lawyer Truong Thanh Duc as saying that there are many clauses in the proposed law that need to be reconsidered.

For instance, the draft of the price law said businesses are only allowed to change prices when there are changes in input costs or in supply and demand. This means even price cuts as part of business strategies or as an attempt to clear stock are not permitted, he said.

"The law needs to create a legal framework for businesses to operate, instead of imposing impractical rules that only apply to some companies, while they are likely to be broken by almost all others," Duc said.

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