PRESS RELEASE
Seven-point plan to ease inflation
In an article published on the Vietnamese Government website, the Prime Minister analysed the reasons for current inflation and elaborated on the Government’s measures to curb inflation and maintain economic growth. To control inflation would require concerted efforts by Government management agencies and authorities at all levels, he said.
In a recent meeting, the Government defined key tasks in curbing inflation, maintaining macroeconomic development, and ensuring social welfare and sustainable growth.
To achieve the targets, the Government proposed 7 measures:
First, the Government would further tighten monetary policy. The constant increase of the money supply in circulation and outstanding loans dating from 2004 were major reasons for high inflation.
The Government began to closely control payment and loans earlier this year, Tightened monetary policy, however, should ensure the economy’s liquidity and the operation of banks and credit institutions. It should also create conditions for domestic production and export activity.
Second, the Government would cut down on expenses and public investments relying on the State Budget, and it would strictly control investment items of State-owned enterprises so as to reduce the deficit and contribute to the economy’s development. Ministries and chairmen of provincial People’s Committees were asked to strictly monitor investment items of State-owned enterprises and terminate ineffective construction works.
Third, development of agriculture and industry would take priority so as to overcome consequences resulting from inclement weather and epidemics and to increase food productivity. Production development was key to increasing the supply available for in-country use and export, curbing inflation and decreasing the trade deficit without side effects.
Fourth, supply and demand of goods must be ensured to promote exports and reduce the trade deficit. Balancing the supply and demand of goods, especially essential goods for production and living, was necessary to prevent sudden price changes and speculation.
To stabilise domestic production, the Government would not increase fuel and petrol prices before June this year and would reduce some fees for farmers.
To ensure food security, the Government decided that the total rice export volume would be 4 million tonnes this year.
The Government applied a flexible exchange rate with an appropriate trading band which should help curb inflation without impacting exports. Additionally, the Government asked that exports increase and imports decrease to balance trade.
Fifth, thrift in production and consumption was encouraged. Government and State offices were called to cut 10 per cent of administration expenses. Businesses must re-check expenses to reduce prices and people were encouraged to save fuel and energy in their day-to-day living.
Sixth, market management should be further supervised to avoid goods speculation, especially in regards to essential items such as petrol, cement, steel, medicines and foods. Cross-border smuggling should be immediately stopped.
Finally, to help people, especially the poor, survive a price hike, the Government would implement social welfare policies and increase salary and allowances.
Inflation fight starts to pay some dividends
The government is pulling out the stops to counter inflation which has seen the price of foodstuffs take off
A Ministry of Planning and Investment report found that the consumer price index (CPI) in March increased 2.99 per cent against February, the smallest increase over the last three months.
Over the first quarter, inflation has hit 9.19 per cent with foodstuff price soaring by 25.92 per cent, housing and construction materials 17.94 per cent and transport and telecommunications 10.05 per cent.
“Although the CPI continued to increase at a high rate, we have seen a tendency of slow down over the last month,” said Nguyen Van Nam, former director of the Trade Study Institution.
He said that the government should continue applying tightened monetary and fiscal policies, boost production and control input material prices.
“We have seen the slow down of the CPI in March. That is a result of governmental measures which have been applied over past months,” said Deputy Prime Minister Nguyen Sinh Hung.
However, ANZ Vietnam general manager Dam Bich Thuy said: “It will be some time before the full impact of these policy changes comes on. It will be a number of months before it becomes clear whether these measures will be enough to bring down inflation.”
The government has tightened the money supply by forcing local banks to buy government bonds, capping credit growth at 30 per cent and widening the dong-dollar trading band to plus or minus two per cent.
During the last cabinet’s monthly meeting, Prime Minister Nguyen Tan Dung ordered government agencies to halt the increase of fuel, electricity, transport, cement, steel, water and coal prices until June.
“This is a very good decision. We are expecting inflation to be reined in over the next few months when these measures show their full impact,”
HCM City targets tourism industry
With an increasing number of foreign tourists visiting
Dong Thi Kim Vui, director of the HCM City Department of Tourism, said the department will encourage the construction of up-market hotels with a total of 2,000 rooms this year.
The city has allocated 5.9ha of land in Thu Thiem new urban area for Saigontourist to build 3,000 hotel rooms and 1,000 booths for fair events. The government-owned company will look for investors to fund the projects.
Saigontourist plans to build a total of 7,000 new upmarket hotel rooms by 2010.
The construction process is slow, however, due to the lack of available land for investors, Vui said.
Several hotel projects have acquired good locations, but land clearances and compensation for displaced residents are complicated and time consuming, she said.
The city currently has 624 hospitality facilities with a total of 10,700 rooms. There are only 12 five-star hotels, nine four-star hotels and 20 three-star hotels, which have a total of 6,500 rooms.
The city received 843,000 foreign visitors in the first three months of the year, an increase of 20 per cent compared to the same period last year, according to the city Department of Tourism.
Nguyen Huu Tho, general director of Saigontourist, said the number of business people visiting the city to attend meetings, conferences and exhibitions is increasing. These people prefer higher-end hotels, Tho said.
Vui said the shortage has caused several foreign tourists to cancel their visits.
The Department of Tourism has encouraged hotel investors to upgrade existing hotels to higher standards.
Saigontourist is providing training courses to improve professional skills for staff in its hotels that will be upgraded to five stars.
The city tourism industry earned a total revenue of VND6.7 trillion (US$418.6 million) in the first three months of the year, up 38 per cent compared to the same period last year.
The End
Last modified 01-04-2008