Prices Hike and Solutions

Prices Hike and Solutions

In the face of repeated price hikes, many showed concern that the economic growth rate would decline and affect living conditions. What is the reality and how is it possible to stabilise the situation?

Different views

In 2004, prices changed unpredictably over a long period of time in Vietnam. The rise was mostly witnessed in foods, foodstuff, consumer goods and services. Since early this year, transport fees increased 30 per cent and pulp price increased 20-30 per cent. As the oil price increased in the world market, many countries have increased the price of petrol and reduced the use of petrol.

According to economists, the price hike would accumulate and continue until the end of the year. The price index is forecasted to increase to 9 per cent and inflation to 10 per cent. Mr Ho Dieu, Deputy Head of the Banking College, Ho Chi Minh city, said: "As the Vietnamese economy is developing, the inflation rate of 10 per cent is normal, it is not a real concern especially as it is caused mainly by the price index".  For his part, Mr Nguyen Trung Thanh, Director of Saigon Investment and Development Bank asserted: "We should remain calm as the conditions are very different with those a few decades ago. The State now has the strength and measures to control the price rise".

Who suffers most?

The overriding fact is that the price continues to rise, causing difficulties for the people, especially farmers. Some people believed that as the prices of foods increase, the farmers would be better off, but it does happen this way. Professor Vo Tong Xuan, an old hand of the Mekong Delta development said: "Farmers suffer bigger loss than urban people when the price rises and the gap between the rich and the poor will increase if the State fails to assist rural areas. The increase in petrol prices must be coupled with other measures to reduce the effects on the poor, especially when the income of Vietnamese people remain low."

Immediate measures

In the present situation, all enterprises must increase business efficiency, reducing production cost, saving energy, materials and indirect expenses. If not, their products and services cannot be marketed for high prices causing the recession to be more serious and leading to the inevitable bankruptcy of many. For the consumers, they must simply reduce their expenses. These are the temporary measures to overcome the difficulties of the national economy.

Meanwhile, economists believed that, though Vietnam has not experienced a long period in a market economy, the country could obtain certain experiences in dealing with markets and prices. The State can take effective measures to control the price hike such as cutting down the circulation of money, reducing the expenses in secondary capital construction, changing exchange rates and interest rates and issuing State and Treasury bonds.

• Hoa Binh