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Businessmen complain about regulation on quoting prices in VND
Enterprises which mainly serve foreign clients or make valuable products are now busy checking their price quotations after receiving a warning from the State Bank of Vietnam that prices may only be posted in Vietnamese dong, and not dollars.
Public relations specialist Lan Anh learned that her advertisement for a resort posted on a well- known website was removed after just several days. It was because the State Bank of Vietnam instructed businesses and organisations to adhere strictly to regulations on quoting prices in Vietnamese currency.
Lan Anh said that it costs some 15 million dong a month to keep the advertisement banner on the website. Now, as the banner must be re-designed, the company will have to pay 10 million dong more.
A Hanoi-based media company said it suffered big losses when it had to remove 20 banners last week. If clients cancel their contracts because of the trouble, the company will lose 300 million dong a month.
Article 22 of the Foreign Currency Management Ordinance, enacted in 2005, clearly prohibits the price quotations in foreign currencies in the Vietnam market. Late in April, the State Bank sent a reminder to relevant ministries and branches, asking to punish violators of the ordinance.
Protecting the local currency and minimizing its ‘dollarization’ is a legitimate objective of the Government of Vietnam. This is a common practice in many countries in the world. However, companies which make and distribute high-cost products, and those which chiefly provide products and services to foreigners have faced big difficulties in implementing the laws.
Travel firms, airlines and hotels complain that every time they send price quotations to foreign partners, they have to explain about the regulation requiring them to quote in dong. Sellers and buyers always have to re-negotiate if the exchange rates fluctuate.
According to Golden Tour Agency Director Pham Tien Dung, quoting prices in Vietnamese dong may harm businesses, because foreign partners prefer making transactions in foreign currencies.
For example, a Vietnam-Singapore tour has a price of $500. When a Vietnamese travel firm quoted the price to a customer, the dollar was converted at 17,000 dong equals $1, which meant that the tour fee would be 8.5 million dong. However, the dollar price later surged to 17,500 dong per dollar, with the result that the travel firm bore a loss of 250,000 dong per traveler, or 25 million dong for 100 clients.
“If we do not change the quoted prices, we will suffer losses, but if we change the quoted prices, we will lose our prestige in the eyes of partners. We don’t know what to do,” Dung said.
Hoang Thuy Linh from Saigontourist’s Marketing Division said that tour fees used to be quoted in US dollars, and travelers could then settle their accounts in dong at the exchange rate at the time. Now the travel firm has to quote tour prices in VND, which can cause difficulties for foreign travelers, because they don’t know if the quoted prices are low or high.
“Being required to quote prices for tours in VND does not make a big impact on tours for Vietnamese customers, but everything has become mixed up with ‘inbound’ tours,” Linh said.
While many businesses have been strictly following the State Bank’s instruction to quote goods and services prices in Vietnamese dong, many others are still quoting prices in dollar. A businessman said that he read about the instruction on local newspapers, while he has not got any official guidance from the central bank.
However, at the HCM City Branch of the State Bank, Director Ho Huu Hanh said that individuals and institutions are expected to inform themselves about circulars, decrees and directives through mass media, because the State Bank cannot give guidance to every case.
A lead researcher at the Hanoi Socio-Economic Institute, Nguyen Minh Phong, said that the requirement should only be applied to the businesses that serve Vietnamese people, while the Government should apply a flexible policy vis-a-vis enterprises which have foreign customers. “I think that we need to show the VND/US$ exchange rate for people’s reference,” he said. “We should only prohibit businesses from trading dollars on the black market.”
vietnamnet, vneconomy
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