Government asking consumer goods producers to freeze prices

BANGKOK: -- Commerce Minister Chaiya Sasomsup is expected to ask Thailand's home consumer goods manufacturers to freeze the prices of their products during a meeting Wednesday, citing that as oil prices are now declining there is no need to hike prices.

Mr. Chaiya said his ministry had invited about 20 major consumer necessity producers to attend the meeting and would ask them their actual production costs.

The producers will be asked to freeze prices for the time being because oil prices are now retreating and producers should maintain prices, he said.

But Prapot Nanthawatsiri, president of Thai Soap, Detergent and Personnel Care Manufacturers' Association, argued that the decline of global oil price and goods production costs are totally a different issue because most producers have been impacted by the rising costs of imported raw materials and not from increased transport costs.

Mr. Prapot said producers of personal and household items such as soap, detergent powder and hair shampoo would explain to commerce ministry officials that the prices of such goods had not risen since the beginning of 2008.

The manufacturers will request that prices should be allowed to "increase at least 5 to 10 per cent", he said, indicating that consumers should be able to absorb such a rise without a problem.

Internal Trade Department director-general Yanyong Phuangrach said he would explain to the producers that the ongoing decline in global oil prices coupled with the Thai government's six economic measures, lasting six months and mostly implemented since August 1, together with other measures should help lower their costs.

The producers, Mr. Yanyong said, had earlier asked the department to hike their item prices by some two to five baht, suggesting that they should freeze their prices to assist consumers while cost of living is rising.

The department plans to invite manufacturers of building materials for a similar meeting next week.

-- TNA 2008-08-13

Not really market economy if the government comes and tells them to alter prices...

This can be no more than a PR exercise by which the Government shows to the electorate: "We feel your pain".

For all manufacturers, input commodity costs are on the up-and-up. That is inevitable with the resurgence of China and India as great economic powers and big populations.

They will only fall in general if there is one mother of a recession (and, in fact, it is only the start of economic downturn in the West that has brought the (possibly to be short-lived) downturn in the price of oil).

Manufacturers now have to live with volatility in the cost of their raw materials, particularly oil and the prices of things whose price is closely linked to oil.

They are very vulnerable. If they set their selling prices too low, they can easily go bust. But, if they set them too high, they can find themselves losing sales at a great rate of knots and easily go bust.

The Government will be well aware of this----but needs to put on a show of concern for the attention of the retail customers, who are the voters. But it is not a dead-loss exercise as it gives the manufacturers the chance to explain things. In the West, that is vital; otherwise Trade Unions will start demanding 'cost-of-living' rises for the manufacturers' workers and easily make manufacturers go bust (and lose some of their members their jobs).

There is a lot of painful mayhem ahead. It helps if people understand why.

Not really market economy if the government comes and tells them to alter prices...

The real question is when "asking" starts to become "ordering".