Govt needs new measures to curb price hikes
The government will have to revise its policy on regulating product prices, as the current mechanism is unable to keep prices stable.
Prices in Laos, especially for food items, have been rising rapidly since early this year, which is causing hardship among the general populace. The government's monthly meeting last week agreed that the sectors concerned should work harder to rein in price inflation.
Officials from the Ministry of Industry and Commerce said the ministry is now regulating the price of three strategic goods - cement, fuel and steel. Under the price management regulations, the producers of these goods must request permission from the ministry to raise their prices.
The ministry has also listed 20 items, including rice, pork and beef, which provincial commercial and industry departments have the authority to manage. The ministry also stockpiles rice, which it can release onto the market when supplies run short, in order to keep prices stable.
But despite these price management regulations and mechanisms, trade officials are unable to prevent the steady increase in prices. Officials said the main reasons for continually rising prices are supply shortages and growing demand.
They also said it was difficult to monitor the price of goods sold in markets due to the lack of trade officials. They pointed out that price management should not be the responsibility only of trade officials but also of other government agencies such as the police, in enforcing the law.
Many consumers have suggested that the government should revise its price management regulations and mechanisms to ensure the effective management of prices, otherwise the rapidly rising cost of living will have a serious impact on their lifestyle.
Economists from the Lao National Economic Research Institute have made the comment several times that rising prices could place Laos at a disadvantage in attracting foreign investment to produce goods for export.
The government's policy is to promote an export driven economy, as current domestic demand is not sufficient to boost GDP growth. Both consumers and economists say that a major priority should be for trade officials to force shopkeepers and vendors to display the price of the goods they are selling. This way, shoppers can make an informed choice about where they will make their purchases and can choose a cheaper outlet.
This lack of set prices is one of the main reasons behind the constant rise in prices, even though the supply is plentiful. In the absence of displayed prices, vendors can indiscriminately raise their prices so that people will bargain.
However, some people, especially high income earners, prefer not to bargain. This makes vendors think they can charge more and people will continue to purchase items at inflated prices, so they persist with their mark-up mentality.
When prices are clearly displayed, it is easier for trade officials to monitor prices, take stock of the situation and determine measures to regulate price increases.