Appreciation of the kip fails to affect Thai goods prices
Appreciation of the kip fails to affect Thai goods prices
The price of most Thai goods in Laos still remains unchanged despite the rising value of the Lao kip against the Thai baht over the past year.
The value of the Thai baht saw a 7 percent drop against the Lao kip over the past 12 months from 265 kip per one baht in early 2013 to 246 kip to the baht this week.
The value of the Thai baht was 258 kip per baht in May, before falling to 252 kip per baht in June and 249 kip per baht in December, according to statistics released by the Bank of the Lao PDR.
The rising value of the Lao kip against the Thai baht should normally put downward pressure on the price of goods imported from Thailand allowing Lao people to purchase more goods from Thailand using the same amount of Lao currency, according to economists.
But despite the rising value of Lao currency, the price of Thai goods in major markets in Vientiane remains unchanged; one of the best reflections that the price of the goods in Laos is not adjusted in accordance with market mechanisms.
Thailand is Laos' largest trading partner and most consumer goods in the country; ranging from tissues, cooking ingredients to cars, are imported from Thailand.
Economists said that Laos had no mechanism to manage the price of imported goods as in many countries therefore it was impossible for the country to curb the price of goods despite the rising value of the Lao kip over the past years.
They said that Laos only has a policy to manage the price of domestic goods which is not fair for domestic firms trying to run businesses in competition with importing firms.
Over the past year, officials from Vientiane Industry and Commerce Department have been trying to curb the price of domestic goods. They set up reference prices for goods such as pork and beef, aiming to set the guideline for the vendors in the market to follow.
Officials also encouraged vendors to display the prices of their goods, making it easier for them to monitor the sums being charged so as they can fine vendors who violate the price management regulations.
The economists said that Laos should have concrete measures to manage the price of all goods, not only domestic ones but also those imported from other countries, notably Thailand, as part of efforts to stem rising living costs in Laos.
Living costs in Vientiane have seen a big jump over the past year thanks to strong economic growth and increasing consumption demand due to the increasing inflow of foreigners into the country.
The fact is that the majority of Lao people do not gain direct benefits from strong economic growth as the main growth drivers such as foreign direct investment projects do not employ large numbers of workers in Laos.
vientiane times
