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Inconsistent and unpredictable tax policies have pushed automobile producers and dealers’ backs against the wall. Toyota, Ford and other local automobile producers have recently decided to increase prices of locally-produced automobiles while several importers have scaled back shipments of brand new and used cars.
The government has scrapped its subsidisation of retail fuel prices, allowing them to float in line with the international market and placing greater pressure on businesses and already surging inflation.
Serious power shortages are forecast this year leading to blackouts which will bite into the economy. Dinh Quang Tri, Electricity of Vietnam’s (EVN) deputy general director, said power shortages would be felt more acutely than previous years as the economy was expected to grow by around 9 per cent in 2008.
A high consumer price index could hurt enterprises in the short-term, but is unlikely to affect their long-term business activities. Figures released by the General Statistics Office indicated that the consumer price index (CPI) slid out of control this year with an increase of 9.45 per cent in the first 11 months.
Health officials have asked for special attention to food safety and sanitation as the number of food poisoning and acute diarrhoea cases rise.
Despite measures to beat tax dodgers, the state is still losing large amounts of money because of company fraud that involves generating fake invoices.
An improved business climate and energy efficiency would help the country reach its GDP target for this year and remove hidden economic risks.
The newly ratified cabinet, with younger faces and astreamlined administrative system, must face up to sustaining a high economic growth rate in the context of Vietnam’s WTO accession.
Foreign limited liability firms struggling to meet a looming deadline to convert into shareholding companies, or re-register themselves under the new Investment and Enterprise laws, can breathe a sigh of relief.
Economists last week warned that high inflation could endanger the Vietnamese economy and called for the government to apply tighter monetary policies to curb price rises.