The Ministry of Finance (MOF) proposed to amend the law on prices to create a specific legal corridor for the synthesis, analysis and forecast of the price, making an important contribution to controlling inflation according to the target.

Price is an integrated issue, involving most ministries and sectors.
Photo: Thu Diu

Weak institutions

According to the MOF, the practical implementation of price management and administration showed the important role of synthesising, analysing, and forecasting prices. This is a regular State management operation that must be performed with accuracy and timeliness to market fluctuations. This will serve as a basis for the standing agencies that assist the Government, the National Steering Committee for Price Management to come up with operating scenarios and to advise the Government in making operating decisions, controlling inflation and stabilising the macro-economy.

Although it was implemented effectively, creating a good practice foundation for price management and administration, the MOF said the institution for this task was still weak, without clear mechanisms or a solid legal framework for extensive implementation from central to local levels.

For example, the content of summarising, analyzing, forecasting, and operating prices in Article 7 of the law on prices is only briefly stated that State management of prices includes the work of synthesising, analysing, and forecasting market prices, but it does not prescribe a legal basis for this work. Currently, the legal institution for the development of general reports, analysis, and forecasts is being scattered in documents under the law, but not in highly effective documents like laws or decrees.

Additionally, the MOF also pointed out the operation mechanism of the National Steering Committee for Price Management has only been implemented in accordance with the Prime Minister's decision on the establishment and operation regulations of the Steering Committee, which has not been legislated. This leads to limitations in the effectiveness of coordination between ministries and branches. Moreover, price management policies agreed to be implemented by the National Steering Committee for Price Management are not yet highly obligatory to ensure relevant stakeholders must comply.

Price is an integrated issue, involving most ministries and branches. Thus, it is extremely urgent to build a comprehensive and complete national database on prices. However, through review, the MOF found that this task has not really met the practical requirements in the process of building and collecting information from ministries and sectors other than the MOF.

Enhancing the legal role in price analysis and forecasting

In the report on impact assessment of policies proposed to develop the law on prices that the MOF has just announced for comments, the MOF expected that the amendment of the law on prices will improve the legal role of the synthesis, analysis, and forecast of prices - one of the main tasks of the State management agency on prices, besides specific price regulation duties, clearly showing the policy and orientation in the development of the market price mechanism regulated by the State; gradually affirming the State’s role in regulating the macro-economy, stabilising and controlling inflation in general. The amendment of the provisions in the law on prices will also consolidate operations and improve the efficiency of the synthesis, analysis and forecast of prices. This will create a legal basis for the Government's advisory and administration work via the mechanism of the National Steering Committee for Price Management.

To achieve such above objectives, the MOF has proposed two different solutions. The first is to add several principled regulations in the implementation of synthesis, analysis, and forecast in the content of State management of prices. In particular, this would strengthen the responsibilities of ministries, branches and localities in the implementation of this task. According to the MOF, this solution will not affect the rights and obligations of citisens under the constitution; not contrary to international treaties to which Vietnam is a signatory. Although the improvement of the basic principles in the law on prices is a simple and easy-to-implement option when formulating policies and is authorised to give detailed guidance to the Government, the legal effect is still not guaranteed compared to the importance of the synthesis, analysis, and forecast of prices.

The second solution is to comprehensively add one more chapter in the law on prices with the content: "Synthesis, analysis, and forecast of prices". This chapter will develop principles and contents of price synthesis, analysis and forecast. Along with that, there are regulations on the focal responsibilities of the MOF, responsibilities of ministries, branches, and localities in implementing the tasks of summarising, analyzing, and forecasting prices. Moreover, there will also be provisions such as methods of synthesising, analyzing information, and forecasting prices; the methods of developing price operating scenarios, recommendations for advice; mechanism for directing and administering prices (including regulations on the establishment and functions, duties, structure, and the powers of the National Steering Committee for Price Management).

According to the MOF, the concretisation of regulations on the work of summarising, analysing, forecasting, and supplementing regulations on the legal position of the National Steering Committee for Price Management demonstrated the views and policies of the Party and State on transforming the State management mechanism on prices towards promoting and attaching importance to macro management, combined with specific management, using limited price regulation measures in case of necessity. Through the work of synthesising, analyzing, and forecasting prices, macro-price management policies and operating policies are updated quickly with sufficient data to timely serve the Government's management, strengthen the policy response of regulatory agencies in the use of macroeconomic tools to regulate and stabilise the market. Thereby, effectively serving the price management and inflation control in the overall macroeconomic management according to objectives set by the National Assembly and the Government.

The legalisation and addition of a chapter on synthesis, analysis, and forecasting of prices will create a solid legal basis and facilitate the organisation and implementation of all agencies from central to local levels. If the detailed regulations are mentioned only in decrees, it will reduce the position and importance of the Government's macro-regulatory and management work.

According to the MOF, through the impact assessment of each solution, they all have advantages and disadvantages, positive and negative aspects, but it brings many positive impacts and is suitable for price management in the market mechanism under the management of the State. Therefore, the MOF proposed to develop the law on prices based on this solution.