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VN’s price management policies different from other countries: Deputy Minister
In Vietnam, distributors are separate enterprises, mostly small businesses, which are always raising their sale prices erratically, according to Cao Viet Sinh, Deputy Minister of Planning and Investment.
Do you think that the eight groups of measures to fight inflation initiated by the Government have brought about the desired effects?
The eight groups of measures to fight inflation were kicked off by the Government in April, and the socio-economics indices showed that the measures have produced good benefits. The consumer price index (CPI) increased by only 2.14% in June, while the trade deficit was US $1.3bil. This proved to be a satisfactory and encouraging result, It should also be noted that the trade deficit was over US $2bil a month in previous months.
Vietnam still can maintain a high economic growth rate of 6.5% in the first half of this year. No other country in the region has the potential to obtain such a high growth rate in the context of the global economic downturn, except China.
Do you think that the good socio-economic results will continue in the coming months?
The Government’s aim is to continue fighting against inflation and ensure macroeconomic stability. I do believe that with the Government’s determination to fight inflation, we will see better macroeconomic indices in the third quarter of this year.
Regarding the price stabilization, steel producers said that they will face a number of difficulties if they have to maintain the current sale prices. The producers have asked to be allowed to raise sale prices in increments. What is your viewpoint about this issue?
In fact, steel producers could have imported ingot steel at a very low prices several months ago. As the State asks them to do all that is necessary to fight inflation, the producers need to cut their expenses in order to reduce their production costs and make a profit.
I think that steel mills can still make profit if they do not raise sale prices, because they are still making steel with the ingot steel they imported at low prices before.
The fertilizer prices have been escalating, while importers and producers do not have enough fertilizer to sell to farmers. What does Vietnam have to do to solve this problem?
As for fertilizer supply, I think that it is necessary to improve the supply as suggested by some economists. We have to not only to raise domestic supplies, but we also have to reduce the import tax in order to pave the way for more imports into Vietnam.
While trying to raise supplies, we also have to reduce demand by cutting expenditures. We have cut 25% of Government bond-sourced investments, which have helped quite a bit in reducing the demand for cement and steel.
Besides, as it is now the rainy season, the demand for construction materials has been decreasing. Therefore, I think the pressure on cement and steel prices will not be strong in June and July.
Do you mean that the Ministry of Planning and Investment does not advocate the suggestion of Vietnam Steel Corporation’s to raise steel prices?
I personally do not think this is an essential policy change.
Do you think that Vietnam should continue applying administrative measures in controlling commodity and service prices?
Administrative orders have brought about certain effects, but we should not abuse those administrative measures. We need market measures to regulate the market economy.
In fact, Vietnam’s price management policies are quite different from other countries’. In other countries, there are systematic retail networks (supermarkets and supermarket chains), while in Vietnam, the distributors are separated enterprises, mostly small businesses, who are always raising sale prices erratically.
We need to restructure the retail networks by setting up requirements and conditions for them to follow.
In Japan, producers and suppliers always notify consumers three months in advance about their price increase plans. In other counties, producers and suppliers always have to weigh the pros and cons of the price increases. In many cases, they make the decision to endure losses in order to retain clients.
I think we need to learn from the experiences of other countries and restructure the trade network accordingly.
VNN
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