The consumer price index (CPI) has increased continuously for the last seven months. The figure rose 6.19% in comparison with late last year.
The increase has caused a "price fever" and threatened economic growth.
People on low incomes, such as farmers and workers, have suffered greatly and their daily life has become more difficult.
Earlier this month, the Prime Minister has asked relevant agencies to take measures to reduce the CPI. In response, the Ministry of Finance has suggested a temporary reduction in import taxes on more than 20 essential commodities in food, fodder, material for construction, cosmetics, electronics and automobiles starting on August 8.
In particular, food prices would be cut by more than 50%.
Local prices have increased in line with international prices. The ministry believes that the lower tax cut would significantly reduce CPI in local market soon and force local producers providing cheaper products.
In addition, some local products' taxation level will be considered.
Furthermore, the ministry will allow enterprises extended time to pay value added taxes for imported agricultural products to help them cut their expenses.
Price supervision for import, production, circulation and retail sales will be tightened to avoid speculation.
Initially, five businesses in the steel industry and four enterprises in the gas industry will soon be checked to find out why they have sharply increased their prices in the last two months.
Last week, the Central Institute for Economic Management (CIEM) caused a "shock" in public opinion as they announced their survey results that the average Vietnamese business spent 1,959 employee-hour per year non tax formalities.
The news was astounding in light of the government having implemented administrative reform for years with significant results.
With so much time and human resources lost on tax compliance, a local business has less to focus on other needs, thus it cannot be as competitive. This is especially true for small-and-medium size businesses.
Another survey from the World Bank pointed out that small and medium sized enterprises need additional time to do paperwork regarding value added taxes, enterprise income taxes and social insurance. Altogether, this requires approximately 1,050 hours per year.
Therefore, the fact that enterprises spend a great deal of time and energy on tax compliance is a reality.
Lower end car manufacturers are staking out a larger piece of the pie as they build factories and assemble car parts right here in Vietnam.
After Malaysian JRD Vietnam completed their factory in the central province of Phu Yen, they starting coming out with nine automobile models ranging from sedan to pick-up trucks priced under US$20,000.
Duc Phuong Limited released a five-seat sedan similar to a popular Korean Matiz, but with a competitive price sticker two thirds that of Matiz. Their seven-seat automobile is being offered for around $17,000.
Truong Hai Automobile Join stock company has also joined the market by importing the Kia sedan from South Korea. After selling 400 Kia's, the company began construction on its second factory to assemble the model in Vietnam.
These companies offer a good alternative to automobiles sold at high prices by world famous automobile companies with well-known brand names doing business in Vietnam.
The latest players in the automobile industry here are attracting customers keen on prices, but it will take time to see how their quality holds up. In the meantime, local consumers looking for a car will have more to choose from.
Source: VNS
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