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How to prevent speculation and unreasonable price rises
The Prime Minister has asked businesses not to increase the prices of essential goods in a bid to control the soaring inflation rate. In the long run, the most important issue is how to boost production and ensure a sufficient supply of goods for the market.
Under the PM’s guidance, most businesses have pledged not to temporarily increase the prices of key products in the national economy to help curb inflation but in reality, the prices of some consumer goods are still rising fast.
In order to control unreasonable price rises, the immediate solution is to supervise the distribution system of essential goods and strictly deal with organisations and individuals, who have tried to make a quick profit by increasing prices.
President of the Vietnam Textile and Apparel Association (VITAS) Le Quoc An feels indignant over the current soaring prices. He said, ”There have been irrational price rises on the domestic market which do not conform to the nature of current price rises on the world market. We need to learn about how the soaring prices of energy and fuel will impact on other goods so that we can keep price hikes at a reasonable level. At present, it is unacceptable to let the price of bricks increase by 300 percent and food prices by nearly 100 percent. Therefore, it is essential to set up a State agency strong enough to prevent speculation and control price rises otherwise every business and craft association will take advantage of this opportunity to push prices up.
Many businesses and craft associations are also feel unhappy with the current situation for the fear of the soaring prices in the domestic market. For instance, the price of steel from factories is around VND12.3 million per tonne but it has risen to VND16-17 million/ tonne, even to VND18-19 million/tonne after being sold to consumers. This means the average rise of VND5 million/tonne is directly going to the agents and causing losses to both producers and consumers.
Unacceptable price rises have also been seen in some other essential goods such as fertilizer, cement and brick. Over the past two months, the prices of two-holed tuynen brick have increased by three or four times over 2007, ranging from VND1,500-1,700/brick. Meanwhile, the prices of input materials including coal, oil and petrol and wages have seen just a 1-1.5 fold increase on average.
Tran Van Huynh, Chairman of the Vietnam Construction Materials Association, suggested that the Vietnamese National Assembly should issue a law soon on anti-speculation and anti-monopolising. Recently, in Germany three cement groups collaborated with each other to increase prices. Finally, the German government used the anti-monopoly law and fined all three groups six million euros. Strong measures and a legal framework are needed to resolve this problem, Mr Huynh added.
The Vietnam Steel Ingot Association said its members had agreed to expand their distribution network and adopt strict regulations to prevent salespeople from increasing prices freely. They pledged to give priority to providing steel products directly to construction sites and consumers and not through sales agents. They also made public their products prices to sale agents.
According to Pham Chi Cuong, Chairman of the Vietnam Steel Association, at present steel businesses have intensified measures to facilitate the transfer of steel products directly to consumers. The association is working with the market management agencies of the Ministry of Industry and Trade to examine and inspect the distribution network.
Fertiliser producers and importers have set up a sales agent system for each business with the aim of delivering products directly to farmers and implementing the one-price policy nationwide. Salespeople have been asked to sell products at list price and get paid a commission for what they sell.
In the long-term, it is necessary to boost production activities and ensure an adequate supply for the market in order to limit speculation and price rises. However, many businesses are facing difficulties in production. The State Bank of Vietnam’s tight monetary policy has helped to reduce the total means of payment and partially control inflation. Nevertheless, tightening up the monetary policy has also made it difficult for businesses to access capital sources. Many representatives from businesses said that apart from tightening monetary policy, it is important to have measures to provide financial assistance to essential sectors to further expand production.
The Government is implementing numerous measures to combat inflation, including a ban on increasing the prices of some essential goods. This is just a temporary measure that will be applied for a certain period of time. Therefore, businesses should make full use of this opportunity to boost production before the prices of input materials are floated by the Government in line with market forces.
VOV
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