Manufacturers raising prices to offset high input costs

Friday ,Apr 09,2010, Posted at: 16:03(GMT+7)

Manufacturers raising prices to offset high input costs

More than 30 percent of Ho Chi Minh City producers say they will soon have to raise the selling price of goods by 7-10 percent due to higher input costs, while others have already done so, an SGGP survey has found. Le Van Tri, deputy general director of the Southern Rubber Industry Joint Stock Company (Casumina), said that raw materials and other input expenses, including higher labor costs, have recently soared sharply, by 15-17 percent over last year. The company has taken all possible measures to lower production costs, said Mr. Tri, but still cannot afford the increased input expenses. To maintain operations, the company in February increased its selling prices by 5 percent. Mr. Tri admitted that any increase in the price of goods is risky at present, given that consumer spending has recently slowed and that the Government is trying to prevent high inflation. However, there is currently no other option but to raise prices, said Mr. Tri, adding that he hoped consumers would be sympathetic. A customer shops at Co.op supermarket on Cong Quynh Street, HCMC. Due to higher input costs, many goods providers say they cannot help but increase their prices up to 10 percent. (Photo: Phunu Online) Other companies, meanwhile, have had to raise prices of confectionaries, cooking oil, beverages and other commodities. Prices of imported goods have been on the rise, too. Prices of most imports, like milk and household goods, have risen since the first quarter due to the adjustment of the exchange rate, according to a local supermarket manager. At the Khang Cuong shop in HCMC’s Ben Thanh Market, prices of household products imported from Taiwan (China) and Thailand have increased in proportion to changes of the USD-VND exchange rate in February. For instance, a 5-liter thermal cooker sold last month for VND450,000 but has now surged to VND520,000. Commenting on suppliers’ price increase plans, Ngo Van Hai, deputy director of the CitiMart supermarket system, said most price increases have been reasonable, with the exception of imported milk products. For this commodity, there has been no similar basis for an increase, said Mr. Hai. “Higher input costs are an obvious issue everyone can see. Distributors cannot force providers not to raise prices. However, we will ask suppliers for clear explanations to ensure such rises are made to an acceptable extent,” Bui Hanh Thu, deputy general director of retail chain Saigon Co.op, said. “In case providers fail to render proper calculations, we will not accept any rise in prices,” said Ms. Thu. Experts have said that manufacturers, traders and distributors need bank loans to maintain and expand operations, but current interest rates are too high for most to afford. Many have said the State should step in and give financial support to businesses for a certain period to help them overcome the current situation, and that companies that produce essential commodities should be given tax breaks. Some experts add that interest subsidies should be granted to trading companies that need loans to invest in building warehouses and transit stations to boost retail trade; while the State should stabilize prices of electricity, water, petrol and oil to ease the cost burden on production businesses.

By Uyen Chi – Translated by Truc Thin http://www.saigon-gpdaily.com.vn/Hochiminhcity/2010/4/80992/