VietNamNet Bridge – Just two weeks after the Ministry of Finance finished its inspection tours of enterprises, during which it got the promise from enterprises that they would not raise prices, the market is witnessing a new price storm.

The enterprises that promised to lower selling prices when receiving the inspectors have ‘forgotten’ the promise. Gas, steel and milk, the key consumer products, have seen the sharpest price increases.

Meanwhile, the Vietnam-Australia Steel Company, which reduced selling prices by VND200/kg to please the inspectors, has raised prices again by exactly VND200/kg.

The enterprises have a common voice in explaining their decision to raise selling prices: the continued price increases of input materials in the world’s market have forced them to do so, though they promised not to raise prices until the year’s end.

Hoang Tho Xuan, Director of the Domestic Market Policy Department under the Ministry of Industry and Trade, said that the skyrocketing input material prices had pushed production costs up, and that the import tax reduction didn’t offset such a sharp price increase of input materials.

“Several tens of percent tax reduction may be considered a big cut, but in fact, this amounts to nothing if compared to the input material price increases,” he said. Therefore, though having promised not to raise prices, they still have to do that in order to ensure profit.

In fact, when announcing the enterprises’ promise not to raise prices further, Nguyen Tien Thoa, Head of the Price Control Department under the Ministry of Finance, stressed that enterprises made the promise under the condition that the world’s material prices would not increase. He said that if the input prices kept escalating, the increase of prices on the domestic market would be inevitable.

Though the price increases have been expected, the new price hike wave is still a headache for state management authorities, because many goods items are seeing price increases at the same time. Especially, food and foodstuffs, and consumer products’ price increases have badly affected many households.

Mr Xuan said that the Ministries of Finance, and Industry and Trade would meet to find solutions to curb the price increases. Especially, he said, the ministries would investigate and impose heavy fines on the suppliers who made corrupt use of the ‘price fever’ to raise their selling prices.

Deputy Prime Minister Hoang Trung Hai on September 20 had a working session with the Ministry of Industry and Trade, during which he asked the ministry to apply measures to keep prices stable, curb inflation, reduce the trade gap and push up local production.

Regarding car prices, Deputy Minister of Finance Truong Chi Trung told the press yesterday on the sideline of the National Assembly’s Standing Committee that he believed local automobile manufacturers would reduce selling prices sooner or later.

Mr Trung said that local joint ventures were under a lot of pressure to lower selling prices.

Mr Trung said that the Ministry of Finance could not order joint ventures to cut prices. However, the manufacturers will reconsider the pricing policies in order to ensure the benefit of consumers and producers.

“As far as I know, manufacturers are considering cutting expenses so as to offer suitable prices. Moreover, the prices will be forced down, when more imports, both brand new and used ones, come; they will have to cut the prices of their products to be more competitive,” Mr Trung said.

Meanwhile, when asked about Toyota Vietnam’s plan to cut prices, Director General Nobuhiko Murakami answered surprisingly that this was the first time he had heard this.

(Source: VietNamNet, VNE)