Cheaper dollar making imports cheaper

The dollar price on the black market has dropped by 2000 dong per dollar in comparison with February, while the dollar price quoted by commercial bank has decreased by 1000 dong. The cheaper dollar has been paving the way for more imports to come to Vietnam.

At a sugar kiosk at Xom Chieu Market in District 4 in HCM City, Minh was seen wavering between two sugar products. One pack of sugar, with no label and trademark, was priced at 17,000 dong per kilo, while the other pack was the product of a domestic sugar refinery and priced at 23,000 dong per kilo.

The seller told Minh that the former product was a contraband, which penetrated into Vietnam through the border gate in An Giang province. The white sugar is now trading at 592.7 dollars per ton at the London Exchange. Therefore, if counting  taxes and freight, import sugar products would have the cost price of 15,000 dong in Vietnam. Meanwhile, the sugar products of domestic refineries are more expensive, selling at 24,000-25,000 dong per kilo.

The seller went on to say that with the dollar prices curbed at low levels and the big gap in the prices between import and domestic products, more and more contraband sugar will flock to Vietnam.

Consumer imports getting cheaper

At a supermarket, a domestically made box of cookies is selling at 57,000 dong, while an import product of the same type is priced at 62,000 dong. The small gap of 5000 dong between the domestic and the import products would prompt Vietnamese consumers to choose  the import product which is thought to have better quality.

Similarly, a bottle of shampoo made in Vietnam is selling at 61,800 dong, while an import product from South Korea is priced at 65,000 dong.

Thuan, the owner of a company specializing in importing and distributing processed food in District 1 in HCM City, said the wholesale prices have decreased by 3-5 percent in comparison with two months ago. She said that import companies now can easily purchase dollars from banks to make payment for the imports, but they prefer purchasing dollars on the black market at lower prices.

According to Saigon Tiep Thi, the prices of imported fruits have decreased by 3000-10,000 dong per kilo, while chocolate and sweets have seen the prices decrease by 5000 dong per product.

In the first four months of the year, the prices of consumer goods, from food, drinks to housewares, garments and cosmetics, increased by 5-25 percent due to the higher dollar, petroleum, electricity and gas prices. However, the dollar price has decreased, which has helped imports become cheaper and more competitive.

Phan Van Thien, Deputy General Director of Bibica, a sweets producer, said the dollar price decreases plus the weak purchasing power both have forced importers to lower the sale prices, because they need to sell all the products before the expiry dates.

He said that the price gap between domestic and import products have been narrowed from 20 percent to 10 percent. Therefore, domestic manufacturers now have to compete more fiercely with imports.

Sellers apply flexible sale policy

While consumer goods have seen obvious price decreases, high-tech product prices remain unchanged. In principle, the product prices are defined based on the dollar prices. However, despite the dollar price decreases over the last month, the products remain expensive.

A laptop distributor in HCM City said, though the dollar price has decreased, retailers still have to pay high prices from suppliers. It is because they are still distributing the products imported before, when the dollar price was sky high at 22,000 dong per dollar.

“We still do not import new consignments of products, therefore, we still cannot slash the sale prices,” he said.

According to Nguyen Duc Hung, Business Director of BrightStar Vietnam, it takes two months on average to adjust the sale products in accordance with the dollar prices

Meanwhile, small shops say it takes them two or three weeks only to adjust the prices. An, the manager of An Mobile in HCM City said that small shops do not depend on partners and they can be more flexible in adjusting prices.-SGTT

Tags: Vietnam exports, Vietnam exports 2011, Vietnam trade