Hoang Tho Xuan, Head of the Domestic Market Management Department under the Ministry of Trade:
I have not heard any author or theory which says what the relation between CPI and GDP should be to be ideal or optimal. We just give a general principle that the CPI must be capped lower than GDP. In fact, it would be a problem if the CPI is approximately the same as the GDP growth rate, because the CPI would be abnormally high, and this would have bad impacts on people’s lives as actual income would be affected, while the nominal income increases inconsiderably.
What is your prediction about the CPI from now to the year’s end? Will Vietnam be able to curb inflation below the GDP growth rate?
In Vietnam, in the basket of goods (goods and services chosen for CPI survey), the proportion of food and foodstuff products are relatively high (42%), while the prices of these products heavily depend on objective factors. Any fluctuations in the prices of these goods, though very little, are enough to affect the general CPI.
Meanwhile, we have not found any solutions which allow us to intervene in the situation effectively. The government can control the rice price on the domestic market by regulating rice exports. However, it finds it very difficult to control the prices of foodstuffs (vegetables, fruits, meat of different kinds).
Which drastic measures do you think the government should take to curb inflation?
It may be feasible to keep the CPI lower or approximate to the GDP. The targeted figures would be 8.2%/8.5% of CPI/GDP, and I think I’m 70% sure of the achievements.
The most important thing is to prevent and stop animal epidemics and restore production. Besides, the government can use tools that allow it to control the volume of imports, which aim to raise supplies. The government should also focus on organising the distribution network well and preventing speculation.
Le Quoc Dung, Deputy Chairman of the National Assembly’s Economics Committee: the lives of farmers will be affected.
The price increases will certainly affect people’s lives, especially farmers, or 70% of Vietnam’s population. What do you think the government should do to ease the difficulties on farmers?
The price increases have had negative impacts on the lives of farmers, while their income does not increase correlatively with the price increases. Both long-term and short-term solutions are needed to settle the problem.
First of all, I think it is necessary to help farmers’ production, so that they can have bumper crops and farm produce go for good prices. However, problems still exist as the state plans to keep prices floating. The Phu My Fertiliser Plant, for example, has been profitable after three years of operation, while farmers still have to buy fertiliser at high prices. We have many times asked for the reduction of the irrigation fee, however, the problem is now still on the table. Too many kinds of fees are burdening farmers.
Let’s talk about the plan to raise the salaries of employees. The increase in salary cannot offset the price increases, thus making the plan to raise employees’ salaries nonsensical. What would you say about this?
There are two sides to the problem. The ideal scenario is that the salary increase does not lead to price increases. The state now has to settle a thorny problem: raising salaries in order to ensure civil servants’ lives and combat corruption, but it also has to pay attention to life in rural areas.