A corner of milk products in a city supermarket. The Govenment will apply a price ceiling on mild products for children in order to stabilise the domestic market. –Photo baohaiphong.co m.vn

HA NOI (VNS) – The Prime Minister approved the Ministry of Finance's proposal on applying a price ceiling on milk products for children.

This is being seen as one way of controlling the prices of these products in the coming time, the ministry said, after it completed a month-long investigation of milk prices and the local milk market.

Following a directive by the Prime Minister, the ministry and the Ministry of Industry and Trade investigated the price regulations and taxes at five milk producers and traders from March 10 to April 10. These firms were the Viet Nam Dairy Joint Stock Company (Vinamilk), 3A Nutrition (Viet Nam) Ltd Company, Nestle Viet Nam Ltd Company, Friesland Campina Viet Nam Ltd Company and Mead Johnson Nutrition (Viet Nam) Ltd Company.

According to the investigation report released on Tuesday, last year and during the first three months of this year, these companies increased the prices of milk products for children less than 6 years old.

All five increased the prices by 2.4 per cent to 30.66 per cent last year, while two of them, Vinamilk and Nestle Viet Nam, raised the prices by 5 per cent to 14 per cent.

Therefore, the finance ministry has asked these firms to seriously implement regulations on listing prices for milk products for children less than six years of age.

The companies must review and save business costs because spending on advertising, discounts and marketing, which are part of the business costs, at the four firms, excluding Vinamilk, exceeded the regulated level under the Law on Corporate Income Tax for milk products for children in the said age group.

The high spending on these activities forced the prices of milk products up by 2.18 per cent to 16.39 per cent, the ministry said.

They must also review the prices of the said products to ensure that they are commensurate with the spending and profit made on the products, it said.

The ministry said at the Government's monthly meeting on Tuesday that the Government agrees with the finance ministry's proposal on applying a price ceiling on the said milk products. Additionally, these firms must register the prices of these products with the state offices, as per the existing regulations.

These solutions, which would be applied for the first time, are expected to stabilise the prices of milk products for the time being, the ministry said.

If the proposals are approved by the Government, the prices of these products could be reduced by VND50,000 to VND70,000 per box, Nguyen Van Nen, the government spokesman, said at the meeting.

The finance ministry also said the investigators had found that Nestle had not informed the authorities about some new prices which had brought in an extra VND5.2 billion, or nearly US$247,000, by the end of March, while the other four firms had not made any tax declarations.

Vice minister Vu Thi Mai said Nestle was fined VND45 million, while inspectors have collected more than VND10 billion in further taxes from the rest of the firms. – VNS