Recent price increases raise inflation jitters

Prices of consumer goods saw the most rapid hike in four monthsp this September, raising fears about spiking inflation late this year.

Prime Minister Nguyen Tan Dung has asked ministries and relevant authorities to “intensify” measures to stabilize commodity prices and help the country maintain its economic and inflation targets.

He ordered the Ministry of Industry and Trade to study production and distribution systems to ensure a balance between the supply and demand of essential commodities and services through the end of the year. The country will also make efforts to keep prices of electricity and coal stable.

In Hanoi, prices on some 300 items, including confectionery products, milk and sugar, rose by 3 to 10 percent in September, according to the Hanoi Supermarket Association.

The association’s chairman Vu Vinh Phu said the prices of essential food items have increased two or three times compared to those of two to three years ago. In the same period, local incomes have risen by just 25 percent.

Phu said the prices of consumer goods will see stronger increases from now until Tet in January 2011 due to holiday demand. “Prices of hundreds of consumer products increase every day,” he said.

Consumer prices climbed 8.92 percent in September from a year earlier, compared with an 8.18 percent advance in August, according to a report issued by the General Statistics Office. Prices rose 1.31 percent in September over the previous month.

Nguyen Thi Ngoc Van, head of the office’s general department, said factors such as the increase in the price of gasoline and school fees, which contributed to rising inflation last month, will continue to affect the consumer prices in the months ahead.

The devaluation of the Vietnamese dong will further drive the price of imported products higher, raising business input costs as well as consumer prices, she said.

“Most imported products have seen a price hike since the dollar increase,” said Vu Thi Hau, deputy director of Nhat Nam Company, which owns the supermarket chain, Fivimart. “But food prices experience bigger year-end increases than other products.”

Vu Dinh Anh, deputy director of the Institute of Market and Price Research, said the demand for imported products is expected to increase from now until the end of this year, while the dollar exchange rate is also expected to rise at both commercial banks and black market exchange locations.

This will only add to the inflationary pressures on the country’s economy.

Nguyen Xuan Phuc, chairman of the Government Office, said Vietnam will continue to tighten control over consumer prices through the end of the year as the country strives to keep inflation at 8 percent. He said it is necessary to keep an eye on milk and medicine prices in particular.

In a recent report, the Asian Development Bank predicted that Vietnam’s inflation would reach 8.5 percent this year and 7.5 percent next year.

These forecasts are down slightly from April’s outlook, owing to improvements in macroeconomic conditions and moderate growth in credit, the bank found. However, large swings in inflation, together with expectations of dong devaluation, suggest that even the forecasts are not firmly anchored.

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Recent price increases raise inflation jitters

Prices of consumer goods saw the most rapid hike in four monthsp this September, raising fears about spiking inflation late this year.

Prime Minister Nguyen Tan Dung has asked ministries and relevant authorities to “intensify” measures to stabilize commodity prices and help the country maintain its economic and inflation targets.

He ordered the Ministry of Industry and Trade to study production and distribution systems to ensure a balance between the supply and demand of essential commodities and services through the end of the year. The country will also make efforts to keep prices of electricity and coal stable.

In Hanoi, prices on some 300 items, including confectionery products, milk and sugar, rose by 3 to 10 percent in September, according to the Hanoi Supermarket Association.

The association’s chairman Vu Vinh Phu said the prices of essential food items have increased two or three times compared to those of two to three years ago. In the same period, local incomes have risen by just 25 percent.

Phu said the prices of consumer goods will see stronger increases from now until Tet in January 2011 due to holiday demand. “Prices of hundreds of consumer products increase every day,” he said.

Consumer prices climbed 8.92 percent in September from a year earlier, compared with an 8.18 percent advance in August, according to a report issued by the General Statistics Office. Prices rose 1.31 percent in September over the previous month.

Nguyen Thi Ngoc Van, head of the office’s general department, said factors such as the increase in the price of gasoline and school fees, which contributed to rising inflation last month, will continue to affect the consumer prices in the months ahead.

The devaluation of the Vietnamese dong will further drive the price of imported products higher, raising business input costs as well as consumer prices, she said.

“Most imported products have seen a price hike since the dollar increase,” said Vu Thi Hau, deputy director of Nhat Nam Company, which owns the supermarket chain, Fivimart. “But food prices experience bigger year-end increases than other products.”

Vu Dinh Anh, deputy director of the Institute of Market and Price Research, said the demand for imported products is expected to increase from now until the end of this year, while the dollar exchange rate is also expected to rise at both commercial banks and black market exchange locations.

This will only add to the inflationary pressures on the country’s economy.

Nguyen Xuan Phuc, chairman of the Government Office, said Vietnam will continue to tighten control over consumer prices through the end of the year as the country strives to keep inflation at 8 percent. He said it is necessary to keep an eye on milk and medicine prices in particular.

In a recent report, the Asian Development Bank predicted that Vietnam’s inflation would reach 8.5 percent this year and 7.5 percent next year.

These forecasts are down slightly from April’s outlook, owing to improvements in macroeconomic conditions and moderate growth in credit, the bank found. However, large swings in inflation, together with expectations of dong devaluation, suggest that even the forecasts are not firmly anchored.

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Vietnam’s shipments to U.S. to face more barriers

HANOI – Numerous trade barriers will likely go up stateside, choking off the flow off goods into the Northern American market, especially from ‘non-market economies’ like Vietnam, a practitioner said in Hanoi on Wednesday.

William Barriger, a legal counselor working alongside the Vietnam Chamber of Commerce and Industry (VCCI) since 2003 over the antidumping tax imposed on Vietnam’s shrimp, said an estimated 14 new trade barriers would go up in the U.S.

The lawyer of the law firm Winston & Strawn said at a meeting at the VCCI Office that the Secretary of the U.S. Department of Commerce in late August had announced new proposals to aid American exports related to the antidumping tax. These proposals, with the primary goal to bolster U.S. exports in the next five years, will in effect create new trade barriers and will defend punitive duties on certain imported products, Barriger said.

He informed the audience that the U.S. considered Vietnam a venue of concern when initiating antidumping lawsuits as Vietnam is also emerging as a production base besides China.

Many commodities originating from China are imposed anti-dumping tariffs stateside, so many manufacturers want to move their production facilities to Vietnam, he said. Any surge in imports into the U.S. from Vietnam may trigger questions on goods dumping, the legal adviser said.

The U.S. Department of Trade in its new proposals also changed the method of calculating antidumping tariffs with an aim to slap higher punitive taxes on imported products seen as being dumped in the U.S. soil, according to Barriger. For example, he said, Vietnam’s tra fish has recently been imposed higher punitive rate as the U.S. chooses Bangladesh for calculating the production cost to apply to Vietnam’s products.

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Vietnam’s shipments to U.S. to face more barriers

HANOI – Numerous trade barriers will likely go up stateside, choking off the flow off goods into the Northern American market, especially from ‘non-market economies’ like Vietnam, a practitioner said in Hanoi on Wednesday.

William Barriger, a legal counselor working alongside the Vietnam Chamber of Commerce and Industry (VCCI) since 2003 over the antidumping tax imposed on Vietnam’s shrimp, said an estimated 14 new trade barriers would go up in the U.S.

The lawyer of the law firm Winston & Strawn said at a meeting at the VCCI Office that the Secretary of the U.S. Department of Commerce in late August had announced new proposals to aid American exports related to the antidumping tax. These proposals, with the primary goal to bolster U.S. exports in the next five years, will in effect create new trade barriers and will defend punitive duties on certain imported products, Barriger said.

He informed the audience that the U.S. considered Vietnam a venue of concern when initiating antidumping lawsuits as Vietnam is also emerging as a production base besides China.

Many commodities originating from China are imposed anti-dumping tariffs stateside, so many manufacturers want to move their production facilities to Vietnam, he said. Any surge in imports into the U.S. from Vietnam may trigger questions on goods dumping, the legal adviser said.

The U.S. Department of Trade in its new proposals also changed the method of calculating antidumping tariffs with an aim to slap higher punitive taxes on imported products seen as being dumped in the U.S. soil, according to Barriger. For example, he said, Vietnam’s tra fish has recently been imposed higher punitive rate as the U.S. chooses Bangladesh for calculating the production cost to apply to Vietnam’s products.

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Imported Chinese toothpicks dominate domestic market

Workers make toothpicks in Dien Chau town in the central province of Nghe An. The higher price of domestic toothpicks have reduced their competitiveness. — VNA/VNS Photo Tran Canh Yen

HCM CITY — The bamboo toothpick market in HCM City, once dominated by domestic producers, has been inundated with Chinese products.

The Sai Gon Customs Department Zone 1 reported that during the first eight months of the year, 911 tonnes of bamboo toothpicks were imported through the Cat Lai Port, 200 tonnes in August alone.

The imports reached a turn over of US$125,000.

Tran Van Phuoc, owner of a company that imports bamboo toothpicks in HCM City, said the imported products only cost VND2.6 million ($135) per tonne, which was half the price of their locally made counterparts.

"Because of the huge price difference, many businesses prefer to buy imported products," he said.

Chinese toothpicks are more diverse in price, packaging and appearance, with prices ranging from VND2,300 ($0.12) to VND23,000 ($1.2) for 10 packages.

Nguyen Lan Huong, a customer in Tan Binh District said "Chinese toothpicks are white, smooth and clean, while some Vietnamese-made products do not look clean and are even rough."

A representative from Tre Viet Enterprise in Central Highlands' Lam Dong Province said that Vietnamese producers often made toothpicks manually while Chinese companies used more advanced technology.

"Our labour is more expensive and the products do not look as good as Chinese ones," he said.

Leader Vu Ngoc Quynh of Dong A, another toothpick producer, holds a different view, however.

He said "toothpicks are most frequently used in restaurants in Sai Gon, not in households, and restaurant owners choose Chinese toothpicks because they are cheaper".

"We have lost about 30-40 per cent of our customers this year," Quynh said, adding that each month their company sells about four tonnes of toothpicks.

To compete with the imported toothpicks, Quynh said his company was planning to produce a cheaper variety to meet the needs of different types of customers.

"We will try to cut down on costs for large packages to restaurants and supermarkets," he said. —VNS

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