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.

Vietnam last year suffered a severe bout of inflation – the consumer price index reached 28% at one point – and a subsequent series of currency devaluations in the wake of the global economic slump have stirred fears that inflation could again unsettle an economy that's been supported by heavy state spending this year.

Economists expect inflation – at 6.91% for the first 11 months of the year compared with the same period in 2008 – to again hit double digits in the second quarter of 2010. Agencies such as the International Monetary Fund and Asian Development Bank have urged Vietnam to begin exiting its stimulus program and constrain bank lending to the reduce the risk of its economy again over-heating and encouraging the return of rapid inflation.

Previously, Vietnam has limited imposing price controls to state-owned enterprises. But Myron Brilliant, senior vice president for international affairs at the U.S. Chamber of Commerce in Washington, on Dec. 15 wrote to Vietnamese officials and said the plan "will make it difficult for our member companies to operate with predictability in Vietnam."

"It will also serve as a disincentive to new direct investment in Vietnam," Mr. Brilliant said in the letter, which was also seen by The Wall Street Journal.

People familiar with the situation say a number of diplomatic missions, including those of the U.S., New Zealand and European Union, have tried to persuade Vietnam that imposing the price controls could damage the attractiveness of its economy.

Officials at the their embassies in Hanoi didn't immediately respond to requests for comment.

The draft circular includes a range of goods that could be stabilized in the event of unexpected fluctuations. They include refined petroleum products, cement, construction materials, fertilizers, veterinary drugs, milk, rice and sugar, as well as anything the Prime Minister, currently Nguyen Tan Dung, chooses to add to the list.

Foreign companies also are concerned that if the circular becomes law, they will be required to report details of their pricing structures. That's a measure that could require foreign businesses to hand over proprietary information to the Vietnamese government.

In his letter, Mr. Brilliant said the measure, if implemented, also "will impose significant new reporting and administrative burdens on enterprises throughout the production and distribution chain."

By James Hookway - The Wall Street Journal - December 22, 2009