Importers urged to lower prices as kip strengthens
Importers urged to lower prices as kip strengthens
The price of Thai-made food and other consumer items sold in Vientiane remains high despite the depreciation of the Thai baht against the kip.
However, the decline in the value of the baht should result in a significant drop in the price of Thai-made goods sold in the capital as the kip now has greater purchasing power.
“We have to look at the cost of goods sold in Thailand. If there is no change in prices there, then the price of imported goods sold in Laos should fall due to the depreciation of the baht,” economist Mr Mana Southichack said yesterday.
More than 50 percent of goods on sale in Laos, especially food, are imported from Thailand. But the perceived disparity in currency values and prices has consumers wondering whether business operators are profiting from the relative strength of the kip against the baht.
The value of the baht against the kip has dropped by 8 percent over the past 10 months. Previously, one baht sold for 250 kip but today sells for 230 kip, according to banks and currency exchange units in Laos.
But prices at many major markets and mini-marts in central Vientiane remain unchanged. For example, a litre bottle of Thai milk costs 29,000 kip, the same as 10 months ago. But taking the exchange rate into account, it should now be priced at 24,000 kip.
The price of other goods such as sugar, cooking oil and health supplements have also seen no change. Only some items such as bakery goods, which companies are licensed to distribute in Laos, have seen a slight drop in price. It can be assumed that the importers of these goods have adjusted their prices because they are afraid of legal charges if they don't comply with Lao laws.
Consumers are urging the sector concerned to look into the pricing issue, saying the price of imported goods should be automatically adjusted in line with fluctuating exchange rates. They also say it is unfair that they are faced with higher living costs when their income remains unchanged.
Garment factory managers told Vientiane Times recently the cost of living in Laos would be higher than in neighbouring countries if the price of imported goods is not adjusted in line with exchange rates. This would make Laos relatively uncompetitive when the Asean Economic Community comes into being at the end of this year.
If the cost of living rises, workers will demand higher wages, they said, adding that Laos needs to keep wages low so that the country is attractive as a production base within the region.
