Rising Costs In Thailand: 4-Month Retail Price Freeze

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GOODS PRICES

Rising costs: 4-month retail price freeze

Petchanet Pratruangkrai

The Nation

Commerce Minister Boonsong Teriyapirom's presence in a consumer product shop

Business representatives agree to curb price rises till mid-September

BANGKOK: -- The Commerce Ministry yesterday successfully pushed for 200 manufacturers to maintain retail prices on goods for another four months - but without any supporting measures when this period expires.

Commerce Minister Boonsong Teriyapirom met yesterday with representatives of businesses that cover 90 per cent of the country's goods trading. During the meeting firms complained that the price freeze policy undermined business growth. They said it would also affect future expansion, as the policy has hit their profit margins.

Boonsong convinced businesses to freeze the price of goods and food from May 15 till September 15. However, the ministry did not promise any measures to offset producers' burdens that would stem from the price freezing policy.

The ministry simply urged companies to adjust their operations and boost management efficiency. It said people should look to use more coins rather than banknotes.

This met some reluctance, with manufacturers sharing similar views and commenting that the government should allow retail prices of goods to be more flexible, in line with market mechanisms instead of using a policy of freezing prices. Otherwise, the market would be distorted.

"Without any approval for price increases, consumers will have to shoulder all burdens because manufacturers will find ways to increase the price by [either] reducing quantity or producing higher quality goods to adjust the price," a leading manufacturer said.

Business reps said the rising price of goods and production costs they now face stemmed from populist policies launched by the government. The increase in the minimum daily wage to Bt300, as well as pledging policies on many farm goods had driven the cost of raw materials up.

A representative from one of the country's largest soft drink producers, said enterprises would face difficulty expanding as their revenue would shrink.

The source said there was no need to tell businesses to adjust themselves as they always do this. The need to be competitive ensured that price increases were their last option. However, the beverage industry had gradually faced higher costs of production, mainly from higher costs for labour, logistics, packaging, utilities, fuel, and the high subsidy price for sugar.

Increased wages had not only marked up production cost by 0.25 per cent, it had largely affected transport as labour costs accounted for 40-50 per cent of logistics, the source explained.

Chen Namchaisiri, vice chairman to the Federation of Thai Industries, said the government should review some of its populist policies, as they had caused higher burdens for businesses - while the government wanted them to freeze the price of goods.

"Some of the government's policies have hit manufacturers' costs. The wage hiking measure has mainly created higher costs of production and resulted in higher prices of goods," he said.

Vichai Assarasakorn, secretary-general to the Board of Trade, questioned whether the government had any measures to handle cost of living rises instead of calling for manufacturers to freeze prices for four months.

He said the government should have more clear-cut measures to assist small and medium-sized enterprises to adjust operations as they would be affected by the price freezing demand. Vichai said traders trusted market mechanisms as they were free to compete with each other to maintain their market share.

"The price freezing measure should [only] be done for a short period as every government has imposed the same measure during the past few years," Vichai said.

Prapot Nanthawatsiri, president to the Thai Soap, Detergent, and Personal Care Manufacturers Association, said producers would cooperate in freezing prices for four months. However, prices could change, if firms faced unpredictable fuel or raw material costs.

Burin Tanatavornlap, honorary president to the Thai Rice Packers Association, said the price of packed rice would not increase largely because of the ceiling price imposed by the government. However, the retail price of packed rice would increase in line with higher costs for rice and production.

-- The Nation 2012-05-16

[waza]

I would one of the first to say that market regulation is good to maintain quality, safety, quantity, to stop gouging and to empower the consumer. However, this policy is extreme market manipulation to atrifically support Yinglucks assertation that prices arent rising under a PTP government and a blatant attempt to politically masturbate the voting public.

[somtampet]

I would one of the first to say that market regulation is good to maintain quality, safety, quantity, to stop gouging and to empower the consumer. However, this policy is extreme market manipulation to atrifically support Yinglucks assertation that prices arent rising under a PTP government and a blatant attempt to politically masturbate the voting public.

U cant vote so why the political involvement.

[OzMick]

Manufacturer's set retail prices? I didn't know that.

[Reasonableman]

If prices aren't rising significantly, as we were assured, why is there a government initiative to freeze them? Puzzling...

[Pib]

If prices aren't rising significantly, as we were assured, why is there a government initiative to freeze them? Puzzling...

Ditto. However, there is an easy explanation: TiT

[Tywais]

It said people should look to use more coins rather than banknotes.

Could someone explain this marketing strategy to me?

[geriatrickid]

Manufacturer's set retail prices? I didn't know that.

Haven't purchased a vehicle have you? Automobile manufacturers have minimum prices they demand dealers respect.

Have you considered an ultralaptop? Intel has set the minimum prices on its key components which has a direct impact on the final price of the product. Do you think LG is going to tolerate a dealer selling a current TV for below cost and damaging its retail network?

[geriatrickid]

It said people should look to use more coins rather than banknotes.

Could someone explain this marketing strategy to me?

I believe it was a suggestion to spend less. It's more of an expression than an actual statement of what to do.

Basically, he is telling the debt burdened consumer to reign in their spending and live within their means.

[OzMick]

Manufacturer's set retail prices? I didn't know that.

Haven't purchased a vehicle have you? Automobile manufacturers have minimum prices they demand dealers respect.

Have you considered an ultralaptop? Intel has set the minimum prices on its key components which has a direct impact on the final price of the product. Do you think LG is going to tolerate a dealer selling a current TV for below cost and damaging its retail network?

Well goooollly. And I thought we were talking about prices being too high, not too low.

[OzMick]

It said people should look to use more coins rather than banknotes.

Could someone explain this marketing strategy to me?

IMHO it is an application of the old proverb "Look after the pennies and the pounds will look after themselves." You can't translate it literally because satang buy bugger all.

Slightly hypocritical for a multi-millionaire (on the low end of the scale) recommending ordinary Thais be parsimonious.

[Reasonableman]

It said people should look to use more coins rather than banknotes.

Could someone explain this marketing strategy to me?

IMHO it is an application of the old proverb "Look after the pennies and the pounds will look after themselves." You can't translate it literally because satang buy bugger all.

Slightly hypocritical for a multi-millionaire (on the low end of the scale) recommending ordinary Thais be parsimonious.

15 million in assets is minor league stuff. Probably a struggle for him too, hence the delectable 7-11 can of sardines and tomato sauce (?) for dinner.

[kimamey]

It said people should look to use more coins rather than banknotes.

Could someone explain this marketing strategy to me?

I believe it was a suggestion to spend less. It's more of an expression than an actual statement of what to do.

Basically, he is telling the debt burdened consumer to reign in their spending and live within their means.

I was wondering about that as well. Seems as good an explanation as any. Things don't always make as much sense after translation.

[kimamey]

I would one of the first to say that market regulation is good to maintain quality, safety, quantity, to stop gouging and to empower the consumer. However, this policy is extreme market manipulation to atrifically support Yinglucks assertation that prices arent rising under a PTP government and a blatant attempt to politically masturbate the voting public.

U cant vote so why the political involvement.

I would suggest you look at the sub heading of the Thailand news forum.

"Thailand related news and discussions around them."

A dictionary definition may also be helpful.

"Forum: a meeting or medium where ideas and views on a particular issue can be exchanged"

As I've mentioned before this isn't Thailand it's the internet. Maybe what's upsetting you is people on here who are intelligent enough to know that if prices aren't rising as stated then there wouldn't be a need to push manufacturers to freeze their prices.

Most governments have some problems like this but this government, as it's the one under discussion has suffered as far as I can see by a combination of stupidity and dishonesty.

I wonder if they could still have won the election without the populist policies. If they could have they would have had a strong base to make a real change for the better and the PM could have provided a boost for women in Thailand.

Sorry about the rant but I get fed up with people who tell posters they can't disagree with the anything to do with Thailand and Thais but feel it's their right to dictate to the rest of the world's population.

Edited May 16, 2012 by kimamey

[sparebox2]

Manufacturer's set retail prices? I didn't know that.

Haven't purchased a vehicle have you? Automobile manufacturers have minimum prices they demand dealers respect.

Have you considered an ultralaptop? Intel has set the minimum prices on its key components which has a direct impact on the final price of the product. Do you think LG is going to tolerate a dealer selling a current TV for below cost and damaging its retail network?

Who would sell below cost?

Maybe only LG dealers.

[hyperdimension]

A friend who is an employee of a particular multi-national electronic appliances company has told me that the company will raise their prices very soon, largely due to the increase in the minimum wage. Those people (including politicians) who state that the minimum wage increase have not or will not affect retail prices are either stupid or lying.

[WhizBang]

This idiot does his shopping in a 7-11?

[hyperdimension]

It said people should look to use more coins rather than banknotes.

Could someone explain this marketing strategy to me?

I believe it was a suggestion to spend less. It's more of an expression than an actual statement of what to do.

Basically, he is telling the debt burdened consumer to reign in their spending and live within their means.

I have always tried to use whatever coins I have left anyway as they take up too much space in my wallet.

But just yesterday I was thinking it may be a better idea to collect and store them due to the higher intrinsic value of metal than paper and plastic. There has been a recent discussion of "value" and "intrinsic" value here: Gold As A Medium Of Exchange After Fiat Money Destruction

Edited May 16, 2012 by hyperdimension

[WhizBang]

U cant vote so why the political involvement.

Do you have a problem with people voicing their opinion in a public forum?

[geriatrickid]

Manufacturer's set retail prices? I didn't know that.

Haven't purchased a vehicle have you? Automobile manufacturers have minimum prices they demand dealers respect.

Have you considered an ultralaptop? Intel has set the minimum prices on its key components which has a direct impact on the final price of the product. Do you think LG is going to tolerate a dealer selling a current TV for below cost and damaging its retail network?

Who would sell below cost?

Maybe only LG dealers.

The statement was made as to the person being unaware of a manufacturer setting a price. I gave examples.

Retail stores have similar policies. Go and visit any McDonalds or Subway and the price will be the sdame in busy Patong where people would pay 2X or 3X as much the bangkok price if they had to.

And yes, many dealers will sell below cost. It's called liquidating goods. Some car dealers, particularly in the west, will also offer incredible prices on vehicles They then make it up on the financing or all the extras the buyer has to pay for.

[mic6ard]

Now we wait til the freeze expires. Wonder how high prices will jump.

Posted with Thaivisa App http://apps.thaivisa.com

[sparebox2]

Manufacturer's set retail prices? I didn't know that.

Haven't purchased a vehicle have you? Automobile manufacturers have minimum prices they demand dealers respect.

Have you considered an ultralaptop? Intel has set the minimum prices on its key components which has a direct impact on the final price of the product. Do you think LG is going to tolerate a dealer selling a current TV for below cost and damaging its retail network?

Who would sell below cost?

Maybe only LG dealers.

The statement was made as to the person being unaware of a manufacturer setting a price. I gave examples.

Retail stores have similar policies. Go and visit any McDonalds or Subway and the price will be the sdame in busy Patong where people would pay 2X or 3X as much the bangkok price if they had to.

And yes, many dealers will sell below cost. It's called liquidating goods. Some car dealers, particularly in the west, will also offer incredible prices on vehicles They then make it up on the financing or all the extras the buyer has to pay for.

So some price do go down.

Not all prices go up.

Remind me of Tecso "Roll back" pricing slogan.

[mic6ard]

Can't wait until the New Year, 300THB nation wide. Food service, manufacturing sectors are going to be SOL. Increase price - lose customers: don't increase price - RIP.

Here in CM, we are at 251THB/day so 20% increase would be needed to get to 300THB/day. <deleted>.

[BigBikeBKK]

I would one of the first to say that market regulation is good to maintain quality, safety, quantity, to stop gouging and to empower the consumer. However, this policy is extreme market manipulation to atrifically support Yinglucks assertation that prices arent rising under a PTP government and a blatant attempt to politically masturbate the voting public.

<deleted>?!

people should look to use more coins rather than banknotes.

Are the red shirts really dumb enough to believe Yingluck's assertion that prices are not going up up up? Or realize that the rising prices are due to her governments ill-conceived policies?

[oilreg]

i like that minister ... seems one guy is caring more for the people then the profit margins of companies,

more politicican should be like that

[Kabinretiree]

If I recall correctly, the last statement I read, the PM said that prices had NOT increased, and in fact were going down...so "Who is Lying?"

[samjaidee]

Manufacturer's set retail prices? I didn't know that.

Haven't purchased a vehicle have you? Automobile manufacturers have minimum prices they demand dealers respect.

Have you considered an ultralaptop? Intel has set the minimum prices on its key components which has a direct impact on the final price of the product. Do you think LG is going to tolerate a dealer selling a current TV for below cost and damaging its retail network?

Those are minimum prices. The problem here is maximum prices. You have also just given two luxury goods as examples and the main problem here is cost of item required for day to day living.

I'm sure you're right but it's not relevant to the topic.

[OzMick]

Manufacturer's set retail prices? I didn't know that.

Haven't purchased a vehicle have you? Automobile manufacturers have minimum prices they demand dealers respect.

Have you considered an ultralaptop? Intel has set the minimum prices on its key components which has a direct impact on the final price of the product. Do you think LG is going to tolerate a dealer selling a current TV for below cost and damaging its retail network?

Who would sell below cost?

Maybe only LG dealers.

The statement was made as to the person being unaware of a manufacturer setting a price. I gave examples.

Retail stores have similar policies. Go and visit any McDonalds or Subway and the price will be the sdame in busy Patong where people would pay 2X or 3X as much the bangkok price if they had to.

And yes, many dealers will sell below cost. It's called liquidating goods. Some car dealers, particularly in the west, will also offer incredible prices on vehicles They then make it up on the financing or all the extras the buyer has to pay for.

McDonalds is a frachise retailer - the set prices are part of the franchise agreement.

MANUFACTURERS often set a RRP, may even indicate it on their product, but their is no compulsion for retailers to charge that price, and it may be higher or lower.

And somehow, I don't think the thread is about cars or ultralaptops, but normal everyday consumables that people are concerned about because they have a big effect on their budgets.

BTW I buy my vehicles at the cheapest possible price, for cash, and fit aftermarket accessories because they are cheaper and I can pick the best quality items.

[anterian]

My daughters in England complain of rising prices, my son in the Philippines does the same, my friends in Malaysia do the same, in Thailand I have started growing a few vegetables on a small plot (8 sq m), rising costs seem a universal trend and always will be.

A simple example is coinage, small coins gradually go out of circulation, remember the farthing and the ha'penny? What about those shiny little coins you get in change at BigC, what do you do with them?

[JacChang]

I see, some here are still brain washed by the government. Care? For the people? Atleast we know which side you stand on.

Likewise, how would you like it if businessmen "paid a visit" to locals for the purpose of "keeping the voice down". Business leaders going to locals and paying them to stop complaining to the government about high cost and etc.?

This is simply propaganda. You are just covering a lie up. You are masking up the situation. Clearly there is a problem, but there are no attempts to fix that source. All they are doing is just covering up the problem with a beautiful lie? PATHETIC, WEAK.

Truth of the matter is, the government has stirred the country in the wrong direction econimically-wise. What's the word again? Oh yes, correct, CARE. Protect the good honest hard working people, let's destroy the rich greedy businessmen. They are our enemy. NEWSFLASH. GET REAL.

OK people. I CARE for you, I love you. Please vote for me again. I will give you wage rises (even though I am not your boss, but I will find a way to force your bosses to do so), I will give you many benefits and tax incentives (by wasting the country's tax revenues from YOUR POCKET on useless giveaways, which could have been spent more smartly on infrastructure, green energy, technology), I will fix all your problems (by covering them all up and we can forget that we have problems)

There is always cause and effect. A government is one that acts above all in the interest of improvement and the future. Not a slave to the society. A good government is one that sets a greater example not in the interest of any individual or specific group. Sure we could have this government giving us wage rises resulting in higher pricing of EVERYTHING, tax incentives for cheaper cars, free computers, tax breaks for businesses, cheaper fuel for the first few months to help deplete the oil fund quickly so we can all enjoy high fuel prices for years to come. Are you happy now? Mr. CARE? Mr. The government is my love?

Please get professional. We dont like our taxed money going all those mentioned routes. We want our tax money to be spend on better roads and infrastructures, more cctv cameras for securities, spend on green energy research investment (solar, hydro, etc.), spent on becoming invulnerable to natural disasters (Complete renovation of the sewer system to be capable of taking 2x-3x the water we've seen before. Floods dont get smaller, they get worse.) and plant more trees in our city. None of these is personal interest. The government has to do the right source of tasks that the public wont do. That is their job. Would you want to build the road with crack holes in it? Hell it's not my business, who's is it? That's where government fits in. To do the greater good for the public.

Back to the topic. The government has caused inflation and rising costs. The public are hurt by this and complain. The government goes to businesses and SILENCE this complaint. Does this magically make it dissapear? Costs are still high, businesses operating near equilibrium with no profit. Soon businesses start to leave as this country has no future run by monkeys. As soon as 4 months is over, DONT expect a minor price increase we seen. We will see major increase like we've never seen before. Once again the government has failed. By silencing 4 month period, it's like fitting a tiger inside a locked cage with hunger for a long time. Once released, it will kill many more. Without government intervention, inflation of prices would be constant at 2-3% according to market situations, but BECAUSE of government "silence 4 months". Once that time period is up, we can expect 10%+ inflation of prices. Because that lie of stable prices has struggled to maintain at that price, and it will burst when the time is up. Remember, we businesses never lose. We are long term. We dont eat our meals paycheck to paycheck. That is what separates the rich from the poor. As long term thinkers, we may agreed to minor temporary losses, BUT expect gains from the losses after that 4 months. Why do it, if we lose? We're not stupid are we? If this place sucks, we'll go somewhere where we are wanted. Opportunities are open. Vietnam looks attractive. Go ahead and "CARE" for your people, in the end all you got is your people. See what they can do for your country. just cry like babies all day. Sometimes the fault lies not with the rich, lies with the poor. Just cry and complain. Are the rich, rich by birth? And continue that way? NO, the rich are people who got guts and deal with their own problems. The poor just whine and complain and seek assistance. Oh prices are high..... I have no money..... (buys another bottle of beer to ease stress).

So good luck with happy people = high wages, high costs, high fuel price, low business profit (bankrupt), less exports due to uncompetitive prices, want more for work less attitude, less tax collected from businesses so we can have less funding for governement activites (real smart, lower ur main source of government income. stab urself with a knife). good luck really... luck is the only thing that's left.