Declining US dollar gives new competitive edge to imports

May 09, 2011 | 17:00

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A declining US dollar price on the free market and at commercial banks has given imported goods a competitive edge over their domestic counterparts, industry insiders say.

The dollar prices fell by nearly VND2,000 on the unofficial market compared to late February and by more than VND1,000 at commercial banks.

Nguyen Ngoc Minh, a sugar merchant at the Xom Chieu Market in Ho Chi Minh City’s District 4, told the Sai gon Tiep thi (Marketing Sai Gon) newspaper that white sugar at the London Exchange was currently trading at $592.7 a tonne, which would be sold at VND15,000 a kilo when imported to Vietnam after taxes and transport fees have been added.

This is cheaper than domestic sugar that is priced at VND24,000 -VND25,000 a kilo. The price difference has enabled imported sugar to flood the domestic market, Minh said.

Hoang Thi Thuan, owner of a business that imports and distributes processed foodstuff in District 1, said wholesale imported foodstuff prices have fallen by 3-5 per cent over two months ago.

A market survey by SGTT showed a reduction of 3,000-VND10,000 a kilo for almost all imported fruit while that of imported confectionery, including boxes of chocolate, fell by VND5,000 per unit.

Phan Van Thien, deputy general director of Bibica, a confectioner, said the lower foreign exchange rate as well as purchasing power have forced importers to reduce prices of several products for fear that slow sales would send them past their expiry date.

He said imported goods are currently only 10 per cent more expensive than domestic ones, instead of the usual gap of 20 per cent. Hence domestic goods face tougher competition not only in terms of prices, but also packaging and design, taste as well as seasonal consumption demand, he added.