Photo courtesy of Thoi bao Kinh te Saigon Online
The Finance Ministry said it has not found any case of transfer pricing abuse after a one-week inspection into dairy firms which have been seeking permission to increase prices, citing rising costs.
Luu Manh Tuong, deputy director of the ministry’s Import Export Tariffs Department, told Thoi bao Kinh te Saigon (Saigon Times) Online that customs officials have ordered the firms to provide documents detailing input prices from their overseas mother firms.
Documents from several firms showed that they have listed import prices close to their mother providers’ prices. But several other firms have not responded to the order.
Major dairy importers since late 2013 have filed requests with the ministry to raise their retail prices by 3-8 percent to catch up with rising costs.
The ministry said it has allowed one foreign firm to hike prices of 10 of the company’s 35 products by 6-8 percent after its documents showed import prices rose by 12 percent.
The name of the firm was not revealed but a Thanh Nien investigation suggests that it could be Mead Johnson, which hiked prices by 5-7 percent as recently as December.
While 70 percent of dairy production depends on imported raw materials, the global prices of major ingredients such as milk powder and butter have increased by 30-57 percent this year compared to a year ago.
Skim milk powder is imported to Ho Chi Minh City at US$4,900 a ton, up around $1,250, while whole milk powder is up $1,555 to $5,155 and butter oil is up $1,096 to $5,746.
The country’s largest dairy producer Vinamilk also said it has had to pay dairy farmers 22 percent more since late last year for fresh milk.
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