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Price pressure in 2017

10:16 | 17/02/2017

VCN- Many fees and charges added to the price of essential goods and services such as petroleum, coal, electricity, health and education will cause challenges for State authorities to control in 2017. However, the Ministry of Finance has had appropriate measures to balance the market price, preventing negative impact on the general price.

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The target of CPI growth of 4% is a great challenge. Photo: H. Van.

Pressure to adjust prices of public services

At the 2nd session, the National Assembly XIV adopted Resolution on the plan for socio-economic development in 2017 with the target of CPI growth of 4%.

According to the analysis of the Price Management Department under the Ministry of Finance, this target was lower than 2016. Accordingly, State authorities will have to face up with a lot of challenges in 2017 due to the pressure of many factors on the price level. Specifically, the Government will both issue the appropriate monetary policy, ensuring the inflation target and support economic growth at a high level with public debt ceiling of 65% of GDP. Besides, the basic salary will increase by 7.4% to 1.3 million vnd per month from 1st July 2017; the minimum wage and salary for employees working in enterprises increased from 6.7% to 7.5% depending on the region from 1st January 2017 and the world oil price is forecast to rise. In addition, fluctuations in supply and demand of essential goods such as food due to natural disasters, environmental and adverse weather can also affect domestic prices. In particular, the biggest challenge for State authorities is the implementation of the roadmap on application of market prices for some goods and critical services such as medical services and education services.

In fact, in 2016, the roadmap on market prices for medical services and education services made significant progress compared to 2015. However, the price of medical services and health insurance has been only implemented at step 2 (31 localities have still been not implemented at step 2). Along with that, the price of education services only reaches 70-80% of the prescribed maximum level. Thus, the pressure on the implementation of market prices for public services in 2017 is still very high, largely affecting the control of the inflation target in 2017.

In this regard, Mr. Nguyen Anh Tuan, the Director of the Price Management Department said that the Ministry of Finance outlined cost-oriented operation to balance between tasks of controlling inflation and tasks of applying prices of some essential goods closer to the market price.

Accordingly, the Ministries, Departments, localities and enterprises will continue to seriously implement key measures outlined in the Resolution of the National Assembly and the Government. The State Bank of Vietnam will issue monetary policy to control the inflation target, keeping inflation at 2%. The legal system on prices will continue to be completed, especially the work of collecting, analyzing and forecasting market information; supervision of enterprises in the declaration of value; strict control of goods and services prices and the fight against smuggling, counterfeiting and commercial fraud.

The Ministry of Finance will also strengthen examination and inspection of prices; continue with the roadmap on market prices for some essential goods and consider appropriate adjustments.

Correct calculation and strict control

Another outstanding issue which should be handled to prevent pressure on the price level is the implementation of the Law on Fees and Charges adopted by the National Assembly at the end of 2015 (taking effect from 2017). Accordingly, 44 fees and charges were converted to a service pricing mechanism, including 17 fees and charges regulated by the State and the rest regulated on the basis of the market mechanism. Till now, the Ministry of Finance has completed the promulgation of regulations on fees and charges of services which it was assigned to implement from 1st January 2017.

Assoc. Prof. Dr. Ngo Tri Long, an economist said: For fees and charges regulated on the basis of the market mechanism, the price of services should be properly and fully evaluated in line with the provisions of the Law. For fees and charges regulated by the State, the State authorities should focus on building legal documents to control market prices.

In the case of special fees and charges, the direct management agencies should coordinate with the Ministry of Finance to issue appropriate valuation methods, build a system of procedures and regulations and calculate the actual cost to form a reasonable price. If the price is higher than the cost of goods, there must be adjustments to ensure the objectives of controlling inflation and stabilizing the macro-economy.

In recent times, in order to avoid pricing instability in the early stages of progress, the Minister of Finance issued Directive No. 06/CT-BTC on strengthening the management, and control of prices, and stabilization of prices in Tet Dinh Dau 2017. Specifically, financial agencies are responsible for advising the People's Committees of provinces and cities to manage prices and stabilize market prices during Tet, especially prices of goods and services. Accordingly, thanks to control of the Finance Department of provinces and cities, commodity prices during Tet Dinh Dau were kept stable, not much fluctuation.

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With this initiative, the above measures of the Ministry of Finance have achieved positive results, which can control inflation, contribute to the restructuring and promotion of economic growth in 2017 and the coming years.

By Hong Van/ Hoang Anh