In the Price Law put forward to the National Assembly (NA) meeting on Wednesday, the government did not clarify the term “unusual price volatility”, which is an important basis for the State to stabilise market prices.
After much debate, the Price Law was eventually passed by the NA, with some adjustments on the list of items subject to price stabilisation and control. However, the most important issue about State intervention in prices is not specified.
The Price Law indicates the foundation for price stabilisation is when commodities on the price stabilisation list become volatile but it does not define what unusual fluctuations are.
Regarding this issue, the NA Standing Committee said it is unfeasible to specify the level of unusual price fluctuation in percentage as a basis for price stabilisation, as each item has a different level of price volatility. Therefore, it is unreasonable to stipulate a rigid fluctuation level applicable to all items.
If regulating the specific fluctuation percentage for each commodity, then the law could not cover all items on the market. It would also lead to complexity in management and administration.
However, the NA Standing Committee admitted it would be difficult to identify unusual fluctuations without specific regulations. Therefore, the NA asked the government to make clear the basis for defining the level of unusual price volatility in a detailed document.
Under the Price Law passed on Wednesday, the State will only set the average retail power price frame rather than regulating specific retail prices, although the State is holding monopoly in this sector.
The NA explained price regulation must be consistent with the market mechanism and the practical situation. In addition, it is necessary to balance the interests of consumers and the stabilisation of production and business, especially in the context that private investors are encouraged to participate in developing the power market.
The Price Law will come into force on January 1, 2013.