VietNamNet Bridge – Formula prices have increased 30 times since 2007. State management agencies, which have failed to control the prices, have blamed this on the loopholes of the laws.

Nestle’s products have increased by 8-9 percent in prices, following the price increases of 7-15 percent of a series of formula products such as Abbott, Friesland Campina Vietnam, Vinamilk and Physiolac just within the first three months of the year.

Confirming the price increases, Vu Quoc Tuan, Public Relation Director of Nestle Vietnam, said it’s time to raise the sale prices when the input costs have increased significantly.

Do Thai Vuong, Public Relation Director of Abbott Nutrition Vietnam, when explaining the price increases; simply said the company needs to adjust the prices in accordance with the market supply and demand. “The main factors that decide the prices of goods are the input costs and the inflation rate,” he said.

Friesland Campina Vietnam has not made any statement about the price increase, but the prices of the products have still been escalating in the market.

Vo Ngoc Anh, an office worker in Hoc Mon district of HCM City, said the price Gain Plus IQ of Abbott has soared from VND430,000 to VND474,000. With the modest income of VND4 million a month, Anh has to cut down expenses on other items to have money for milk formula for the baby.

Formula manufacturers exploit loopholes in the laws to raise prices

Ngo Tri Long, a well-known economist, said the current loopholes of the laws have lent a hand to formula manufacturers and distributors to adjust the sale prices spontaneously.

Under the current regulations, manufacturers and distributors have to register their sale prices of the formula products for children of less than 6 years old to the management agencies.

The prices of the products have been put under the management of the Ministry of Finance’s Price Control Agency, the Ministry of Industry and Trade’s Market Management Agency and the Ministry of Health’s Food Hygiene and Safety Agency. Meanwhile, the price registration is not required for other dairy products.

Under the currently applied national standards, milk powder products have the protein concentration at over 34 percent. Meanwhile, the required levels are only 10-15 percent in other countries.

The regulation has prompted the distributors to declare their imports as milk powder to enjoy the low tax rates of 3-5 percent. In Vietnam, they add some nutrients and flavoring to turn the products into supplement food. As such, they don’t have to register the sale prices of the “supplement food” products.

Under the current laws, supplement food products bear the tax rates of 10-15 percent.

Nguyen Anh Tuan, Deputy Head of the Price Control Agency, at a meeting with the local press recently, also explained that supplement food products have not been put under the State’s price control; therefore, distributors of the products don’t have to register their sale prices to the agency.

The answer by Tuan has raised the anger among people, who believe that the state management agencies have denied their responsibility in the failure to control the prices.

There are 27 products available on the market which are declared as supplement food, but sold at the formula prices.

Since 2012, the Ministry of Finance has released 7 legal documents relating to the milk product price control. However, to date, the ministry and relevant branches remain powerless in controlling the formula prices. As a result, formula, named in the government’s list of the products subject to the price stabilization, has seen the prices fluctuating most heavily.

PL TP HCM