The hikes in electricity and fuel prices on March 1 are causing distress to businesses and ordinary citizens. With prices going up all round as a result, practicsing thrift seems to be the only solution at the moment.

Nguyen Tuan Khai, chairman and general director of the International Dairy Products Company, said he had to consider everything very carefully to save costs “or else we may go bankrupt.”

The company is investing in new equipment to reduce power consumption, including solar-operated, since power is a major production input in the dairy industry.

“We already had to pay around 50 per cent higher prices of VND11,400 per litre to dairy farmers and now comes the new power price, but we cannot increase our prices accordingly,” he complained.

Confectioner Bibica’s production costs have risen by 10 per cent due to the electricity price hike, according to deputy general director Pham Van Thien. Cost cutting and improving productivity are the only options available to the company in this scenario.

Vu Thi Thuan, chairwoman of pharmaceutical company Traphaco, said her packaging and printing partners were asking for a 30 per cent hike in prices.

“We manufacture our products in modern factories meeting WHO standards, including environmental, and therefore we consume more power than normal,” she said, adding production costs would naturally increase.

Traphaco has called on its employees to practise thrift and carefully select suppliers to reduce costs. Thuan urged employees to share the difficulty by not asking for higher pay. But then workers too face hardships caused by the price hikes.

Supermarkets like Citimart, Maximark, Co.opMart, and Big C have already listed five to 15 per cent higher prices for a number of items. But they claimed that suppliers were demanding higher prices and they themselves have not yet factored in the higher power costs. More price increases may be around the corner yet.

Pascal Billaud, Big C Viet Nam general director, said his supermarket outlets used green technologies to reduce electricity consumption and cut costs.

As usual landlords are asking tenants, generally immigrant workers with low incomes, to pay higher than the official electricity tariffs and higher rents citing inflation.

Transport rates too are increasing. The railways, for example, plan to increase both cargo and passenger tariffs, which will, in turn, contribute to a fresh round of price increases.

Universal housing

All efforts will be made to develop housing and ensure people’s housing demands are basically met by 2020, according to a draft strategy from the Ministry of Construction.

The houses that are built should, in terms of quality, facilities, and prices, be appropriate for the country’s economic situation and people’s needs, Nguyen Manh Ha, head of the Ministry’s Department of Housing and Property Market Management, said in HCM City last Friday while unveiling the strategy.

The average housing space per capita will be 25 sq. metres, and the minimum, 8sq.m. In 2009 the average space was 16.7sq.m.

Policies relating to land, planning, finance, and credit will be drafted to promote housing development and enable people to build their houses.

All kinds of investors will be encouraged to develop properties for sale and rent.

Housing for students, workers at industrial parks, State employees, armed forces personnel, and urban poor will be a priority.

The minimum size of residential projects in major urban areas and key economic regions will be 500ha.

A housing savings fund will be established in which individuals and credit institutions will be stakeholders.

There will be incentives for builders of small and medium-sized apartments.

Current housing prices are out of reach of average-income earners, leaving a large gap between supply and demand, while the Government has yet to offer incentives for building houses for lease.

Ha said other countries’ experiences showed that the Government should take the initiative to invest in areas that were not attractive for private investors – such as houses for poor people and for rent.

“Many developing as well as developed countries like Singapore, South Korea, and Japan have State-owned firms and funding for developing such kinds of houses.”

Property developers should have access to cheap funds from the government to build housing for low-income earners and workers in IPs, he said.

There should be administrative measures to ensure sustainable development of the market and avoid the volatility that had plagued countries like Thailand and the US, he said.

Farm insurance okay

Prime Minister Nguyen Tan Dung last week approved a pilot agricultural insurance programme against natural disasters under which the Government would subsidise farmers’ insurance premiums.

Under the programme, beginning in July, poor farmers will be fully subsidised while those just above the poverty line will get an 80 per cent subsidy.

Other farming households and individuals will get a 60 per cent subsidy and farming organisations, 20 per cent.

Three main categories will be covered – rice, livestock like buffalo, cows, pigs, and poultry, and aquaculture (tra and basa catfish, black tiger shrimp and white-leg shrimp).

Rice crops will be insured in the provinces of Nam Dinh, Thai Binh, Nghe An, Ha Tinh, Binh Thuan, An Giang, and Dong Thap, livestock in Bac Ninh, Nghe An, Dong Nai, Vinh Phuc, Hai Phong, Thanh Hoa, Binh Dinh, Binh Duong, and Ha Noi, and fish and shrimp in Ben Tre, Soc Trang, Tra Vinh, Bac Lieu, and Ca Mau.

There are certain conditions to be fulfilled by the beneficiaries – for instance, the household must have at least 10 dairy cows or 50 animals raised for meat.

Phung Dac Loc, secretary general of the Viet Nam Insurance Association, said in Viet Nam agricultural insurance was insignificant compared to the overall non-life insurance figure.

Premium income on agricultural insurance in the first half of 2010 was a mere VND958 million (US$48,000) while total non-life insurance premium was worth VND8.24 trillion.

There are many reasons for this, including the small scale of the average farming household and the high premiums demanded by insurance companies since the risk of natural calamities and epidemics is too high in Viet Nam.

French insurer Groupama came to Viet Nam in 2001 and offered coverage for poultry and shrimp and fish in the Cuu Long (Mekong) Delta. But it failed to take off.

The Viet Nam Insurance Corp. (Bao Viet) has also failed in efforts to tap this segment.

Source: VNS