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Outbreak of “complaining disease” among businesses
Businesses always complain about difficulties and ask for support from the government. However, after they get the government’s support, they never think of slashing sale prices to assist consumers, one expert says.
More and more industries and businesses are beseeching the government for assistance. Not only small- and medium-size enterprises, giants in the oil and gas, electricity, steel and automobile industries are also asking for support, or asking for permission to raise the sale prices of their products.
Earlier this year, the Ministry of Agriculture and Rural Development proposed raising the import tax on dairy products in order to protect local production and encourage consumers to use domestic products.
However, while government agencies were still arguing about whether to accept the proposal or not, dairy product prices went up. Explaining the price increases, producers said they had to do that because of higher input material prices and possible import tax increases.
As a result, the Ministry of Finance has had to maintain the preferential tax scheme applied in 2007. And the price of milk in Vietnam is still one of the highest in the world.
Other goods set to go up
Deputy General Director of Big C Thang Long Nguyen Thai Dung said that the supermarket has received notices about price increases of vegetables and fresh food from many suppliers.
Hapro has also received notices from some 10 suppliers that the sale prices of confections, dried food will increase. The suggested price increases are between five and ten percent, while some suppliers have suggested increases of as high as 18 to 30 percent.
But price increases have also been occurring with other products like steel and cars, though the government cut the car ownership registration tax from 10-12 percent to 5-6 percent, and the VAT by 50 percent, and released a series of other support policies.
The Vietnam Automobile Manufacturers’ Association has recently sent a petition to the government, asking for a delay of the implementation of the luxury tax law until the end of 2009, or until which time the market has recovered.
The Vietnam National Oil and Gas Group (PetroVietnam), which accounts for nearly 30 percent of Vietnam’s GDP, asked for permission to raise the price of gas from the Cuu Long basin from $2 to $2.98 per 1 million BTU. PetroVietnam said that higher input material prices had made its profit lower.
Finally, the proposal by PetroVietnam was accepted by the Ministry of Finance, which said it believed that the gas price increase would not affect electricity prices. However, experts still fear that the Electricity of Vietnam will still raise electricity prices, reasoning the higher gas price.
Demand stimulus packages not enough, apparently
To date, the government has initiated two demand stimulus packages which aim to support domestic businesses. However, the packages, worth thousands of billion dong, do not seem to have been especially effective: Businesses are still complaining, and consumers still have to purchase products at high prices.
Dr Nguyen Minh Phong, Head of the Economics Research Division under the Hanoi Socio-Economic Research and Development Institute, said that when launching the demand stimulus packages, the government ‘forgot’ to ask the businesses that get support to cut the sale prices of their products.
“I think that the government needs to set the condition for businesses which get support funds that they have to cut product sale prices,” Phong said.
He went on to say that businesses should share difficulties with the state and consumers, and need to stop complaining and clamoring for aid.
“It seems that businesses suffer from the ‘complaining disease’,” Phong said. “That would explain why enterprises which enjoy monopolies in their fields never think of reducing sale prices.”
VietNamNet, VnMedia
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