Govt urged to adopt measures to address inflation threat
Govt urged to adopt measures to address inflation threat
While many have welcomed the government's announcement that it will raise the salaries of state officials next fiscal year, some are not reassured that the higher incomes will leave them any better off.
“It's good that the government will increase salaries for state officials but don't have great expectations that you'll have much more money in your pocket,” said a senior government official who asked to remain anonymous.
“If the government cannot control inflation and the price of goods and services continues to spiral, higher salaries will mean nothing.”
Minister of Finance Mr Phouphet Khamphounvong announced last week that the government will increase salaries by nearly 40 percent and provide an additional living allowance of 760,000 kip for state officials, to help them make ends meet in the 2012/2013 fiscal year.
The finance minister said the government would not ask the Bank of the Lao PDR to print extra banknotes to address the large budget deficit, which would drive inflation rates higher. However, many are still concerned about the current inflation trends.
According to Vientiane Times' observations, many people don't believe that the sectors concerned will be able to keep the price of goods and services unchanged once the government introduces the new salary rates in October.
They say past experience has shown that the government is unable to control the market price of goods and services despite the rising value of the Lao kip against major international currencies such as the US dollar and Thai baht.
Laos imports most consumer goods but the increasing strength of the kip in recent years has not translated to greater purchasing power in international markets. The price of imported goods has risen as well, negating the higher value of the kip.
A number of car dealers in Vientiane have put up their prices after learning that the demand for their vehicles is increasing. Consumers say this is unfair and dealers should not raise their prices while their business costs remain the same.
The government only has fixed pricing for cement, fuel and steel, the prices of which cannot be increased without approval from the Domestic Trade Department. However, cement traders always increase the price of their products without approval, and trade officials fail to punish those who violate the price control regulations.
Many countries have introduced a number of effective, direct and indirect mechanisms to control the price of goods and authorities fine traders and vendors who increase prices without approval.
Director General of the Lao National Economic Research Institute, Dr Liber Libuapao, said the government needs concrete and effective measures to control the price of goods and services otherwise economic growth will mean very little in reality.
“It does not make sense when we earn more money but have to spend more too,” he said, adding that one of the key issues the government must address is to boost domestic productivity to ensure a sufficient supply of goods as incomes start to rise.
vientiane times
