Enterprises demand stable exchange rates
Enterprises demand stable exchange rates
The Bank of the Lao PDR has to work harder to stabilise currency exchange rates as their fluctuation can have serious consequences for business operations.
According to the latest enterprise survey, a little fluctuation in the exchange rates can have a knock-on effect on the turnover and profit of enterprises, in particular large firms, which are more involved in international transactions.
The value of the Lao kip saw a 1.66 percent drop against the US dollar in the first six months of this fiscal year from 7.867 kip per one dollar to 8,000 kip but rose 3.59 percent against Thai baht from 259.32 kip per one baht to 250.33 kip.
The declining value of Lao kip against the US dollar will give a major boost to enterprises, which produce goods for export, in particular garment firms but the drop also has a negative impact on firms, which import goods, economists said.
The change in currency can make some firms happy but the movement also poses problems for others, it is therefore better for the central bank to do its best to keep currency exchange stable, they said.
Central bank officials said the National Assembly had approved the policy for them to keep exchange fluctuation within a plus or minus five percent range.
The bank is in position to keep currency exchange rates stable thanks to high levels of foreign reserve, which is expected to secure the import of goods for about five months.
The 2013 enterprise survey, which made possible under cooperation between Ministry of Planning and Investment, Lao National Chamber of Industry and Commerce and GIZ also showed that fluctuation of fuel pries creates difficulty for enterprises in planning input and outputs accurately.
The price of fuel in the country has fluctuated over recent months due to the changing price of crude oil on the world market. The government has a policy to keep prices of fuel below 11,000 kip per litre.
Last year, the government spent more than 400 billion kip to subsidise fuel prices as part of efforts t o keep the price of other goods low.
The rising price of electricity is also one of the external problems, which Lao enterprises identified. The government has approved increases in the electricity tariff until 2017, adding that the move is aimed to encourage investment in the electricity generation sector.
Business people said the government sh ould keep electricity prices low so they can reduce business operating costs, adding that Laos is a major electricity supplier so the price of power should be low.
However, officials from Ministry of Energy and Mines said p rices of electricity could not be cheaper as it would not attract local and foreign business people to invest in the sector, one of the main factors, which could lead to a shortage of electrical power.
vientiane times
