VietNamNet Bridge – The newly released decision by the Ministry of Finance which aims to tighten the control over formula milk prices remains unhelpful: a new price increase wave has begun.

New price hike foreseeable

Under the decision, the formula milk products for children up to 36 months old, the dairy products and milk-containing nutrition products, liquid or in powder, have all been put under the MOF’s price control. This means that the suppliers must register the price adjustments to MOF.

The decision took effects on November 20.

However, the tighter control set up in the new regulation still cannot prevent a new price increase wave.

Tran Thanh Huyen, a saleswoman of a formula shop in Ba Dinh district in Hanoi, said she has been informed by Abbott that the manufacturers would raise the prices of all of its products by 3 percent from early December.

Abbott’s Pediasure is sold at VND570,000 per 900gr can, Ensure VND660,000. As such, consumers would have to pay VND15,000-30,000 more for every 900gr can they buy.

Nguyen Quan, the owner of a mini market in Hoang Mai district in Hanoi, said not only Abbott, but some other brands, including Enfa, would also raise the selling prices sharply.

Management agencies remain powerless

The representative of the Ministry of Finance has affirmed that it would check the formula prices and punish the companies which unreasonably raise the selling price.

The official said the ministry would compare the current prices with the prices in 2012, when the products were named in the list of products for price stabilization, to find out if the price increases are reasonable.

Since early 2013, due to the changes in the names, the products have been excluded from the list. Therefore, the official said, the ministry would check the prices to find out if there are abnormal factors in the pricing policy.

According to an expert, in the last many years, dairy products – now listed as nutrition products for children of up to six years old – have been continuously increasing at a galloping rate, though the products have been added into the list of products subject to compulsory price registrations since 2007.

The expert cited a report as saying that the prices of the products have increased 30 times within six years, which means that the price increased once in every two months.

Difficult to control cost prices

The relevant ministries’ determination to control formula prices still cannot make manufacturers and suppliers shrink back. The prices still have been raised regularly by them, reasoning the import price increases, higher tax or lending interest rate increases.

Dr. Nguyen Minh Phong, a well-known economist, believes that the problem lies in the fact that the formula import price remains uncontrollable.

“The prices would be chaotic because of failure of controlling the input costs,” he noted.

Deputy Head of the MOF’s Price Control Agency Nguyen Anh Tuan admitted that it is not easy to control the formula import prices.

“The formula products, which are distributed in different markets, have different contents made to fit the different tastes of the markets. Therefore, it is very difficult to compare the prices,” Tuan said.

He went on to say that the imports are provided by the foreign manufacturers, while it is nearly impossible to approach the data from them.

Thanh Mai