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Vietnam to cap prices for baby formula in June

Vietnam to cap prices for baby formula in June

Friday, May 23, 2014, 11:13 GMT+7

The Ministry of Finance will put a ceiling on wholesale prices of milk products for children under six starting next month in Vietnam, the ministry announced Thursday.

Last month the finance ministry inspected the country’s five largest milk businesses, and decided to cap wholesale prices of the 25 bestselling products that have generated massive revenues for them.

The inspected businesses include: Vinamilk, Nestlé Vietnam, Mead Johnson Vietnam, Friesland Campina Vietnam, and 3A Nutrition Vietnam, the authorized distributor of Abbott products in the Southeast Asian country.

Among the products whose prices will be capped are Enfamil A+1 900g, Enfamil A+2 900g, Dielac Alpha 123 HT 900g, IMP Friso Gold 3 1.500g, NAN 2 BL InfMPwdr LEB011A-2 800g VN, Enfagrow A+3 vanilla 1.800g, and Grow G-Power vanilla 900g, according to the ministry.

The ceiling prices are 10 percent to 15 percent lower than the current wholesale prices of the products, and in some cases, 20 percent lower than market rates.

“Under this measure, wholesale prices of these products will surely shrink, which will lower retail prices accordingly,” the ministry said in a statement.

The finance ministry also stipulated that retail prices must not be more than 15 percent higher than wholesale rates.

For instance, a 900g can of Dielac Alpha 123 HT is capped at VND167,000 and Vinamilk will have to distribute it to wholesalers at VND165,000. Retailers will sell the product at a maximum price of VND189,000 under the new regulation, while it currently fetches more than VND200,000.

Milk producers and distributors are required to register their wholesale prices with the Ministry of Finance, while the retailers will also have to do the same with local price management agencies, according to the finance ministry.

The ministry will publicize the registered wholesale prices for consumers’ reference. “Any businesses that are found in breach of the ceiling prices will be penalized,” it warned.

Consumers happy, dealers upset

Shortly after the finance ministry announced the milk ceiling price plan, many Vietnamese consumers have welcomed the news.

“The ministry should have done this long before, but it’s better late than never,” Ngoc, a consumer in Hanoi, told Tuoi Tre.

“I do hope milk prices will not repeatedly soar like in previous years.”

In the meantime, milk dealers are worrying that they will fail to empty stocks before having to sell at the new prices.

“I will surely incur losses if I cannot manage to sell all these hundreds of products,” Huyen, who runs a milk store on Hang Buom Street in the capital city, lamented.

Huyen said she had stockpiled the products at prices that are up to VND50,000 a can higher than the new retail prices capped by the finance ministry.

“And I have already cleared payment for the suppliers,” she added.

However, an official from the finance ministry said he has not been made aware of any complaints from milk businesses on the ceiling prices.

“Some milk businesses have reportedly complained that they will suffer losses with the capped prices, but the ministry has not recorded any such negative reactions,” Nguyen Anh Tuan, head of the ministry’s Price Management Department, told Tuoi Tre on Thursday.

Comparison of current retail prices and capped wholesale prices of some milk products

Product

Current retail price (VND)

Capped wholesale price (VND)

Disparity (VND)

Enfamil A+1 900g

429,000

381,000

48,000

Enfamil A+2 900g

409,000

363,000

46,000

NAN 1 BL NWB019-4 S

375,000

323,000

52,000

IMP Frisolac Gold 1 400g

255,000

196,000

59,000

IMP Frisolac Gold 2 900g

540,000

400,000

140,000

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