Unintended Consequences Of Price Control

The adoption of Circular 122/2010/TT-BTC (“Circular 122”) on broadening the State’s control over the pricing of goods and services of the Ministry of Finance has not only been met with strong opposition from industry and trade experts but also warranted unintentional consequences.

As a result, our Article aims to identify and analyze the consequences brought about by the adoption of Circular 122 by specifying and dissecting the legislation of Circular 122 with a heavy emphasis on the conditions for the application of price valorization measures, the price valorization measures themselves, the implementation of Circular 122 and the lack of protection of confidentiality regarding businesses’ price management in Circular 122.

Consequently, having Circular 122 in place, Vietnam has unintentionally opened itself to a plethora of issues ranging from the unequal application of the State’s authority, the reluctant encouragement to black markets, the reduction in quality of goods and services to a possible violation of the WTO and the General Agreement on Tariffs and Trade 1994 on the national treatment of foreign suppliers as well as hindering enterprises from maintaining the secret of their price management.

Therefore, our Article suggests the National Assembly to take part in and review the draft law on price management in consideration of the impact of governmental price controls on foreign direct investment.

The full PDF version of our Article can be read here.

Keywords: price controls; price valorization; GATT 1994; WTO; Circular 122/2010/ND-CP.