Sunday, March 02, 2008

Ensuring growth target and price control in Vietnam

21:45' 01/03/2008 (GMT+7)

VietNamNet Bridge - The Government is working hard to adopt measures to control the increasing consumer price index and the impact of the recent increase in petrol prices on production and business activities, according to Cabinet ministers at a press briefing in Hanoi on February 28.

Building petrol ceiling prices

One of the hot issues which has captured public attention in recent times is the soaring prices of commodities, especially the increase in petrol prices.

Minister of Finance Vu Van Ninh assured reporters that the Government still controls and has no intention to float petrol prices. He said that the decision to increase oil and petrol prices has been thoroughly taken into consideration by the Government.

“The Government cannot incur losses forever,” said Mr Ninh. “The Government is only changing its management methods by permitting petrol trading businesses to fix prices in line with regulations of the market economy. However, it still controls the market through the price management mechanism that means selling prices are not allowed to be adjusted to higher levels than the fixed ceiling levels.”

According to Minister Ninh, the Ministry of Finance and the Ministry of Industry and Trade will build ceiling prices of oil and petrol for businesses to register based on market factors.

Minister Ninh also spoke of the Government’s efforts to curb the consumer price index (CPI) which spiraled to an alarming level of six percent in the first two months of 2008. He partly attributed the increase to incorrect forecasts and said that it is hard for the Government to meet the target of keeping the inflation rate lower than GDP growth rate this year. He said that the Government has worked out solutions for maintaining economic growth and bringing market price under control.

The Finance Minister also announced that the Government has yet to discuss an increase in the price of electricity at the moment. It will pump VND9 trillion into the stock and real estate markets to help them develop healthily. In addition, it will support 30 percent of the interest rate from bank loans granted to fishermen to build large capacity vessels.

Providing financial assistance for the poor

At the press briefing, Minister of Agriculture and Rural Development Cao Duc Phat acknowledged that the historic 38-day cold spell had wrought havoc on agricultural production. About 120,000 cows and buffaloes died, mostly in northern highland localities where poor and ethnic people live.

To help them overcome their heavy losses, Mr Phat said his ministry will assess and ask the Government to provide financial assistance for the poor and highlanders to help them resume production and stabilise their lives.

Mr Phat said that localities which have newly transplanted rice destroyed during the cold spells are trying to complete the transplanting of additional winter-spring rice by March 15 as scheduled to ensure a high yield.

Regarding the planting of organic vegetables in Hanoi, he said that the municipal People’s Committee is considering a VND5,000 budget to build organic vegetables growing areas to supply quality products for local consumption and for export.

Ensuring landscape for Van Phong Bay area

Reporters have expressed concern about the building of Posco-Vinashin steel complex at Van Phong deep water seaport in the south-central coastal province of Khanh Hoa.

Minister and Chairman of the Government Office Nguyen Xuan Phuc reiterated the Government’s view that the construction of the complex must not affect the landscape, environment and the development of the seaport.

On March 11, 2005 the Prime Minister approved a zoning plan for Van Phong Bay area till 2020. Accordingly, the area will be developed into an economic zone comprised of combined sectors such as tourism, services, port, industries and aquaculture, with the Van Phong international transit port as the core.

A detailed zoning plan for the port was approved by the Minister of Transport on July 13, 2007 after being appraised by domestic and foreign consultants.

Later, Posco group from the Republic of Korea proposed building a US$5.8 billion steel complex on the whole central area of Hon Gom peninsula at Van Phong port.

On January 15, the Government Office asked for a halt to the construction of the transit port to make clear “a number of related issues”. Seven days later, Posco-Vinashin joint venture was permitted in principle to draft a steel plant project to be built on a potential position at the port on condition that the joint venture would use new technology to meet environmental standards. In addition, the Vietnam National Shipping Lines (Vinalines) was asked to start work on the two wharves as part of the Van Phong Port project to maintain its construction pace.

Many scientists, maritime experts and the Department of Maritime asked the Government to reconsider its decision to allow the joint venture to implement the steel project. They reasoned that the project will not only occupy a large area of Van Phong international transit port and Van Phong economic zone, but also have a negative impact on the ecological environment of the bay.