International practices in price management

In some countries, most of the prices of goods and services are operated following the market price mechanism

Experience of some countries in price management

The Ministry of Finance said that the survey, collection and evaluation of the price management and administration of some countries in the world showed that most of the prices of goods and services are operated following the market price mechanism. Only a few prices of goods and services are managed and regulated by the State, mainly for essential commodities such as electricity prices, petrol prices, gas prices, and public utility products and services with the first principle, which is to cover the actual costs incurred and the appropriate profit level. The State will not compensate for losses, and enterprises must be responsible for their business results. The State performs price management at certain levels through macroeconomic measures (financial, monetary, investment, import and export, etc.) and policies and laws on prices.

Up to now, many countries have enacted laws regulating prices. Specifically, China enacted the Price Law in 1997; Thailand enacted the Business Competition Act in 1999; Korea promulgated the Price Stabilization Law at the end of 1975; Australia enacted the Price Control Act in 1983; Malaysia enacted the Price Control Act of 1946; Singapore enacted the Price Control Act 1950. Some of the price laws are only valid at certain times. However, most laws are still being implemented with appropriate amendments and supplements in a particular historical period.

Price management measures that are commonly applied in these countries include pricing, guidance on price calculation for several essential goods and services; implementing price stabilization like regulating supply and demand, controlling price-forming factors, promoting competition, and providing information on prices; strictly handling violations of the law on prices; apply inflation targeting policy.

In addition, the Ministry of Finance said that through studying international experiences in the context of the current period of intense international economic integration, all countries are in the trend of price liberalization and pursue the model of the market economy; along with that, the Government's price control and management have also been changed in the direction of gradually reducing the direct state intervention in the market economic mechanism, but switching to more indirect forms by using financial tools, competition, taxes, etc.

However, up to now, the reality showed that no matter which country with different political regimes and different economic development strategies, they were all geared towards the implementation of market mechanisms with the participation of State management on prices at different levels because it was necessary to overcome the defects of the market mechanism (such as natural monopoly, public utility). Although this difference was caused by different socio-political infrastructure conditions in each country, it is necessary to choose a price management policy to ensure that it was consistent with national development goals in many aspects. In addition, state management and price stabilization are regulated in the event of natural disasters, epidemics, etc., leading to crisis and market price instability, causing disorder in safety and social security.

Countries that pursue the model of a market economy, when formulating policies on price management, have to evaluate and choose to focus on price management based on product characteristics such as products that can be exclusive or have a significant impact on national security, the macro-economy (electricity, petroleum, water) or commodities that are public utility or are not attractive to investors, so the Government must jump in by launching many policies which have a price policy (including the use of monetary funds) to ensure social security goals (such as medical examination and treatment services, educational services).

The principle of price management in all countries is to respect the right of self-valuation of organizations and individuals; at the same time, depending on each user, the Government may offer different price intervention policies. However, the main point still focuses on the Government's support and intervention on prices for vulnerable subjects in terms of social security or remote areas. For example, educational services for preschool, medical services for poor people, etc.

There is no significant difference

According to the Ministry of Finance analysis, the law on price management in Vietnam and other countries generally does not have a big difference for goods subjected to State management. For example, China, with similar economic characteristics as Vietnam, has made significant strides in reducing price controls, although it still keeps the Laws on price management and the Government manages the prices of commodities such as gas and petroleum.

Experience from price management in Korea has demonstrated the need for a high-powered Council to set orientations and guidelines for price stabilization. Although Japan does not have a mechanism to support policy beneficiaries through prices, it still implements social security policies through the country's welfare funds to support prices for consumers; at the same time, it is necessary to develop a database system on prices, publicity and transparency of operating policies.

Price management of electricity in Vietnam can learn from the US electricity price regulation model, which combines the monopoly control model with the competition model. Therefore, it can apply measures to control the supply, plan the farming area, and manage Norway's milk price, etc., to ensure the prices are profitable for the people.

Meanwhile, in the context of the Covid-19 pandemic, the high demand for some essential consumer goods, medicines and medical supplies during the outbreak period pushed up the prices of these goods. However, suppose the supply does not respond in time, especially during the time of applying social distancing. In that case, we can learn from the experiences of the US and Singapore in building sanctions for opportunistic price-raising behavior, taking advantage of increased demand and temporary scarcity of goods to increase prices for profiteering.