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Dollar price tags abound despite government ban
Many businesses continue to quote prices in US dollars despite a government ban.
The central bank has tried to regulate foreign exchange transactions and reduce dollar use in the economy for many years without much success.
Despite an implicit ban on listing prices in foreign currencies since 2005, almost all products in computer shops in Ho Chi Minh City have dollar price tags. The shops use arbitrary exchange rates to calculate dong prices when selling.
The State Bank of Vietnam sets a daily reference rate for the dollar and allows it to fluctuate by up to 5 percent on either side. The dong is, however, often traded outside the official band in the so-called black market.
Many car dealers, property firms and foreign language schools in the city quote prices in dollars, saying they need them to pay their partners.
But analysts reject this, calling it just a trick to take advantage of the higher unofficial exchange rates.
Shops that sell motorbikes and cars and property transactions denominated in dollars have caused great damage to consumers, the government said in a report Monday.
The report quoted Prime Minister Nguyen Tan Dung as ordering the police and city governments in Hanoi and HCMC to step up surveillance and crack down on unregulated forex trading and advertising and quoting of prices in foreign currencies.
Last year, just two real estate developers and two private schools in HCMC were caught demanding payments in foreign currencies and each fined VND8.5 million (US$478).
A central bank official, who wished to be unnamed, told Thanh Nien the bank cannot monitor all businesses due to lack of personnel and needs the cooperation of other agencies. According to the bank, there are about 100,000 businesses in the city.
A forex expert said a fine of VND5- 12 million ($280-675) is no deterrent, and suggested harsher penalties, including revocation of license for serial offenders.
Newswire VnExpress Tuesday quoted Hanoi-based economist Nguyen Minh Phong as saying listing prices in the local currency is necessary because “it will help reduce dollarization and give consumers a sense of security.”
But the ban on listing prices in foreign currencies should be applied flexibly, he said, adding businesses that serve foreign customers should be exempt from the ban as long as they do not trade dollars on the black market.
Tour operators said the ban causes them a lot of difficulties since many of their customers and business partners are in foreign countries and require prices in dollars.
Pham Tien Dung, Director of Golden Tour Company, told VnExpress that if the dong weakens, travel companies would incur losses [on outbound tours] since they cannot increase prices suddenly.
thanhnien, vietnamplus
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