Firms confident to ride out CPI fears

As such, the government’s plan to keep CPI lower than this year’s estimated gross domestic product growth rate of 8.5 per cent was not hit.

“A high CPI is a big issue for foreign-invested firms like Cash & Carry Vietnam Ltd., which sells goods at a low price,” said Uwe Hoelzer, managing director of Cash & Carry Vietnam Ltd.
“We have had to postpone raising prices on a number of goods and accept decreased profits,” Hoelzer said.
“However, it’s only temporary inflation and it won’t affect our long-term business expansion plans.”
Cash & Carry Vietnam hopes to open four new outlets in the next three years, with a total investment capital of up to $60 million.

Similarly, a number of automobile firms, including Toyota Vietnam, have said they want to expand production to satisfy domestic demand.
World Bank chief economist Martin Rama said a high CPI would affect input costs of production and retail enterprises.

However, he insisted that he had confidence in Vietnam’s long-term business environment, stressing the $16 billion in registered foreign direct investment capital committed this year.
Tran Van Ta, Deputy Minister of Finance, said that the government was working hard to control the CPI.
He said the government was taking concrete steps to make sure the CPI was lower than the 8.5 to 9 per cent gross domestic product growth rate next year.

“Enterprises who are found to have raised prices inappropriately will be strictly punished. The government will continue slashing duties if the price of commodities on the international market rises further,” he said.
At a government meeting last week, a document on market and price controls was issued that required concerned ministries to review and apply measures to harness price increases.
Amongst the measures was tighter control on the securities market, particularly unofficial securities trading, and monetary markets.

However, Hanoi International Technology Centre managing director Preben Hjorlund said due to the increasing CPI, enterprises also faced difficulties in increasing wages for labourers in the short-term.