|
Illegal timber exports cause inflation: Commerce minister
The illegal trade in timber, including exports, is partly to blame for rising inflation, according to the Minister of Industry and Commerce.
Speaking after attending the 7th Legislature of the National Assembly in Vientiane yesterday, Dr Nam Vinhaket said the increase in illegal exports of timber had resulted in an unexpected inflow of foreign currency into Laos. This had boosted people's purchasing power while the supply of goods remained unchanged.
“The illegal trade in timber is particularly lucrative and some people are flush with money and happy to spend freely. In some border areas, timber traders buy a chicken for 100,000 kip and this is still cheap for them,” he told the local press when questioned about measures to curb inflation.
Dr Nam made the comment in response to members of the National Assembly who are asking the government how it proposes to lower inflation, which is adversely affecting the economy after reaching 9.24 percent in April, higher than GDP growth.
He said the government tightened up illegal timber exports earlier this month, which has reduced the amount of money coming into the country.
Illegal sources of money are not detected by the Bank of the Lao PDR so it leads to unexpected growth in money supply.
Dr Nam said quite a few people earn income from non-production activities such as the sale of their land. With plenty of money to spend they pour cash into the marketplace, causing an oversupply of money.
Another cause of rising inflation is the increasing price of fuel in the world and domestic markets, he said. This results in higher production costs and it is impossible to stop businesses putting up their prices as otherwise they could not continue to operate.
Dr Nam said inflation in countries from which Laos imports goods is another cause of higher inflation in Laos. Most of the food we eat is imported, so it is impossible to rein in inflation.
Inflation not only poses challenges to economic stability but also opportunities, and is a reflection of the fact that demand is high and there are opportunities for businesses to produce goods for domestic consumption.
Dr Nam said he supported the policy of the Bank of the Lao PDR to offer low interest loans to businesses for the production of goods for the domestic market. When the supply of goods meets demand, prices will automatically fall.
vientiane times
|
