VietNamNet Bridge – The volatility in prices of raw materials could be even more serious in the second quarter, warned Deputy Minister of Industry and Trade Bui Xuan Khu, and he urged industry to take swift measure to rein in costs while ensuring quality products.
Khu made the statement at a meeting last week of a ministry working group with local authorities to devise solutions to ease the burdens on domestic manufacturers caused by raging materials prices, both domestically and internationally.
Nguyen Thu Uyen, director of the Garment Company No 2, based in the northern city of Hai Phong, said input costs have skyrocketed, with the costs of some imported goods soaring by 30%, along with fuel prices that have risen 3-5%.
Sao Vang Co Ltd deputy director Nguyen Dinh Long said higher oil prices had pushed up the costs of transportating a single container of goods by VND300-400,000 (US$19-25).
Meanwhile, it was nearly impossible for garment exporters to renegotiate prices with customers based on these new, higher costs, Uyen said.
Tran Xuan Bai, director of the Department of Industry in the northern province of Hai Duong, said some food products exporters in the north have been unable to purchase sufficient quantities of raw materials and have had to turn to suppliers in the south, further driving up costs and cutting profit margins on already-signed export contracts.
Reports from Hai Phong and the northern provinces of Hai Duong, Ha Tay, and Hung Yen suggest enterprises are being hit by higher costs on all fronts. Late last year, the Government raised the minimum wage, driving up the costs of employing workers who have contractual protection from being laid off. The costs of construction materials were also rising, slowing the progress of construction in industrial zones and negatively impacting business expansion plans of enterprises.
Year-on-year growth in industrial output in Hung Yen alone in the first quarter of this year remained at 23.7%, lower than the anticipated growth of 26%.
Khu urged local authorities at last week’s meeting to commit to supporting local enterprises and to ease administrative burdens on them.
In response, officials of Hai Duong Province pledged to set up a fund to finance enterprises as needed to help them guarantee stable business operations.
Khu also said his ministry has requested Electricity of Viet Nam (EVN) to ensure sufficient power for producers and that the Government was committed to developing infrastructure such as roads and water supplies, as well as telecommunications capacity.
Administrative procedures have been streamlined to ease costs for enterprises, but companies still complain of being regularly audited by authorities. Many businesses also felt confused and uncertain over recent and expected changes in tax policies, said Ngo Van Thong, a representative of the Hai Phong-based International Co Ltd.
High productions costs are passed directly through to consumers and are a major factor in Vietnam’s rampant inflation. The consumer price index in March rose at its highest pace over a two decades, hitting 19.39% year-on-year, according to preliminary statistics from the General Statistics Office.
(Source: Viet Nam News)
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