The draft Law on Price was tabled last month for discussion by the National Assembly. This article introduces new contents of the draft Law as well as suggestions to improve it.
The elaboration of the Law on Price aims to create a comprehensive legal framework for price management in the context of a socialist-oriented market economy and global integration, according to the Price Management Department, the drafting agency.
It not only redresses the limitations of the 2002 Ordinance on Price (2002 Ordinance) but also adds new provisions to meet the requirements of price management in the new situation, said the drafters.
The draft Law on Price (draft Law), which was presented last month to the National Assembly for debate, consists of 51 articles arranged in five chapters.
New contents of the draft Law
Principles of price management
The draft Law establishes two principles of price management. The first principle is that the State performs price management according to the market mechanism, and respects the rights of enterprises to set and compete in prices in accordance with law. The second is that the State regulates prices through economic and administrative measures provided in this Law to stabilize prices and protect the rights and lawful interests of enterprises and consumers and the interests of the State. This can be regarded as a mixed mechanism using both invisible and visible hands in price management.
Publicization of information on price
The draft Law provides the publicization of information on price by state management agencies, enterprises and the mass media. This is a new provision compared to the 2002 Ordinance.
Specifically, the Law requires state management agencies to make public the State’s policies and measures to manage and regulate prices and price-related decisions through press conferences, in the mass media or other appropriate forms. Enterprises must publicize information on price and basic economic-technical specifications of their goods and services through price display and in the above forms. Information and communications agencies have the duty of publishing accurate, objective and truthful information on price and take responsibility for such information under current regulations.
Rights and obligations of enterprises
Compared to the 2002 Ordinance, the draft Law defines more clearly and expands the price-related rights of enterprises. Notably, enterprises have the right to determine and adjust selling prices of goods and services they produce or trade in (excluding those subject to price fixing by the State. They may compete in prices through such mechanisms as bidding, auction, price agreement, price negotiation and other price-competitive forms in accordance with law.
The draft Law additionally grants enterprises the right to propose competent state authorities to adjust prices of goods and services they produce or trade in which are on the list of those subject to price fixing. It also stipulates the right of enterprises to file complaints about or report acts in violation of the law on price which cause damage to their legitimate interests.
Under the draft Law, enterprises are obliged to comply with pricing decisions and price stabilization measures applied by competent authorities, register, declare and display prices and publicize information on price. They have to settle complaints about prices of their goods and services and pay damages for their violations of the price law.
Rights of consumers
Since the Law on Protection of Consumer Rights stipulates general rights and obligations of consumers, the draft Law only defines the price-related rights and obligations of consumers. Consumers enjoy the rights to select and agree on prices when buying goods and services according to their own needs and practical conditions; to be supplied with accurate and adequate information on prices, quality, sources and origin of goods and services; and to file petitions through social organizations to competent state authorities to adjust prices of goods and services subject to price fixing by the State when price constituents change.
Price regulation
Price regulation activities of the State include price stabilization, price fixing, price negotiation and examination of price constituents.
Issues like anti-dumping and control of prices of monopolized goods under the 2002 Ordinance are not addressed in the draft Law to avoid overlap with the Ordinance Against Dumping of Imports and the Competition Law.
Regarding price stabilization, the draft Law states the State will apply price stabilization measures in two cases: (i) when the prices of goods and services see abnormal fluctuations and (ii) when price fluctuations affect social-economic stability. The second case is new compared to the 2002 Ordinance.
When the prices of essential goods and services not subject to price fixing by the State, including principal materials, fuels and services for production and circulation and essential goods and services like food, clothing, accommodation, study, travel and medical treatment, see abnormal fluctuations or see fluctuations affecting socio-economic stability, the State will apply price stabilization measures for definite periods of time suitable to the actual conditions at that time.
Price stabilization measures specified in the draft Law include regulating demand and supply, buying in and selling out stocks, and controlling inventories; examining price constituents; determining specific prices, maximum and minimum prices and price frames. These measures are the same as those defined in the 2002 Ordinance.
Compared to the 2002 Ordinance, the draft Law abolishes subsidization of the prices of agricultural products when their market prices fall too low, causing damage to farmers, and the prices of other important essential goods and services, because it may lead to subsidizing the prices of exported agricultural products, which is prohibited under the World Trade Organization (WTO) rules.
The draft Law adds some important measures, including financial and monetary measures, setting up of price stabilization funds and price registration.
In reality, these measures have been applied by the Government and prove to be appropriate and effective.
Regarding price fixing, the draft Law introduces a set of criteria for identifying products and services subject to price fixing. They are goods and services under state monopoly; goods and services of enterprises enjoying monopoly; essential goods and services of enterprise groups holding dominant market positions; important natural resources; and public-utility products and services and public services produced or provided under orders placed or plans assigned by competent state agencies.
The Government is assigned to fix prices for important natural resources, the Prime Minister, goods and services under state monopoly and of enterprises enjoying monopoly; and the Minister of Finance, other ministers and chairpersons of provincial-level People’s Committees, public-utility products and services and public services produced or provided under orders placed or plans assigned by competent state agencies.
The draft Law also provides the principles, grounds for, and methods and forms of price fixing.
Examination of price constituents is a new issue compared to the 2002 Ordinance.
Under the draft Law, examination of price constituents is examination by competent state agencies of constituents of buying or selling prices of goods and services which are calculated by enterprises when the prices of these goods or services see abnormal or unreasonable fluctuations in order to ascertain that these prices are formed at reasonable level and compatible with market prices under normal conditions.
Goods and services subject to examination of price constituents include those subject to price fixing, those subject to price stabilization and other goods and services with prices seeing abnormal fluctuations for which examination is requested by the Prime Minister, ministers, or chairpersons of provincial-level People’s Committees.
Concerning price appraisal, though
Room for improvement
In its review report on the draft Law, the National Assembly’s Financial and Budgetary Committee agreed that one of the important objectives of the promulgation of the Law on Price is that the provisions of the Law must be conformable with the mechanisms of a socialist-oriented market economy and minimize state intervention in the supply-demand relationship. However, the draft Law has not yet made a “new qualitative step” compared to the 2002 Ordinance. It still focuses much on state management and the role of state agencies in deciding and regulating prices.
Price management is necessary to limit negative aspects of the market but, as a law on the rights and obligations of enterprises in determining prices for goods and services, some provisions of the draft Law still express excessive intervention of the State in the supply-demand relationship, said the Committee report.
The Committee suggested the Law on Price should be designed to reflect the management role of the State as the policy- and law-making body, inspector, and regulator at a certain extent.
The State should adjust or directly intervene in prices mainly by economic measures when the market sees major price fluctuations, negatively affecting the economy and the people’s lives.
The Committee was also concerned that many important issues were still left for the Government to regulate. The draft Law assigns the Government and the Ministry of Finance to detail 10 articles and clauses out of a total of 51 articles. Six articles refer to the application of relevant laws to such important issues as price fixing grounds and methods, goods and services subject to price stabilization; goods and services subject to price fixing by the State; competence to fix prices, etc.
Discussing the draft Law at the last National Assembly session, many deputies said the Law should aim at achieving the objective of price management under the market mechanism while ensuring state intervention in certain cases.
Citing problems in the recent management of the prices of medicines, milk and other essential commodities, many deputies said that price stabilization measures had not been implemented properly and the Law should make clear cases when the State needs to stabilize prices and lists of goods and services which need state intervention.
They asked the drafters to specify ranges of price fluctuation which need state intervention to stabilize prices and kinds of monopolized goods and services, natural resources and national reserves.
Other wanted to see greater transparency of sources of price stabilization funds and stricter control of the use of these funds.
At the December meeting of the National Assembly Standing Committee, the committee members and the drafters agreed to include in the Law the lists of goods and services subject to price stabilization and price fixing. (VLLF)-