Tuesday, December 22, 2009

Vietnam Mulls Price Controls on Foreign Firms

WSJ reports:
Vietnamese finance ministry officials are drafting proposals to impose price controls on foreign-owned and private companies doing business in Vietnam....

A draft circular prepared by the price-control unit of Vietnam's Finance Ministry and viewed by The Wall Street Journal proposes setting price controls on a wide range of goods -- including petroleum products, milk and fertilizers -- to prevent what the document calls "abnormal fluctuations."

It's unclear whether Vietnam will write the proposed rules into law. Vietnamese officials didn't immediately respond to requests for comment, except to confirm the existence of the draft circular.
This is really a new twist on the bizarre concept of price controls. Price controls only on foreign owned companies. If successful, this would result in those companies ending their businesses in Vietnam, which means less supplies of goods, which means even higher prices.

Vietnam last year suffered a severe bout of inflation – the consumer price index reached 28% at one point. Do you think their central bank might be printing a few of the Vietnamese currency, the dong.

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