Protecting 12 Key Commodities as Retail Market Opens

Decision 160 right before G hourThe above list is stipulated in Decision 160 on 4 December 2008 by the Government. This decision ratifies the Comprehensive Strategy on the protective policy to domestic industry while complying with international commitments and WTO regulations up to 2020. The Decision clearly provides that the State shall gradually reduce and come to abolish its interference into commodity price, except for some strategic and necessary commodities as mentioned above.

This document clearly states that in the long run, the pricing mechanism for commodities whose prices are fixed by the State will gradually transfer to the market mechanism.

 

The Government advocates gradually rubbing out subsidy (including subsidy via price) and implementing market price for every commodity and service according to WTO commitment roadmap.

 

Apart from perfecting the policy on price, competition and monopoly control, in the time to come, the Government will also support and encourage associations and enterprises to set up a price roadmap for commodities of great importance, and large volume so as to create a price competitive environment.

 

In terms of tax reduction according to roadmap, Vietnam will continue its tax protection for some commodities in need of support. The tax adjustment for some certain commodities needs a transition time and will be widely announced before application.

 

The Government also requests the Ministry of Finance to flexibly apply tax calculation methods to ensure transparency and limit application of absolute tax. In addition, anti-dumping tax and countervailing duty need to be studied soon and effectively applied to protect domestic production.

 

A series of solutions on investment, production, business, industrial service, support for competition, capital, science and technology, environment and personnel are also put forward with an aim to protecting domestic production until 2020.

 

Among which, the Government’s concentration to prevent economic activities which can create barriers for market development and competition as well as reduce opportunities to invest and join Vietnam market is well worthy noted.

 

Complying with global integration commitments There are many opinions that the right to control these 12 commodities means that Vietnam still continues its subsidy for some domestic production categories, going against WTO commitments. However, economic experts point out that this Decision is not against the law.

 

In the commitment upon WTO entrance, even when the service sector is included in the “liberalisation list”, country members can still set exceptions for this sector. In case of retail and wholesale distribution service, there are three exception forms, including exception in terms of commodity area, operation and geographical scale. Accordingly, foreign enterprises shall not be allowed to distribute some certain commodities and conduct their business in some certain provinces and cities.

 

Above exceptions can be either permanent, temporary or be mixed with other exception forms to minimize operation of foreign enterprises.

 

Specifically, Vietnam already has a list of everlasting exceptions, including such commodities as cigarettes, cigars, books, newspapers, and magazines, etc. The list of exceptions with time limit includes cars, motorbikes, pulling machines, cement, tyres (except for tyres of aero planes) and papers, etc.

 

It is known that such commodities as fertilizer and cement are also in the list of commodities being strictly controlled in terms of price during the past time when Vietnam tries to get inflation under control.

 

Liberalization or protection, trade liberalization or competition, all must comply with market regulations and consumers’ interests. Vietnam’s retail market is having great opportunities for development when 1 January 2009 is approaching.
Huong Giang