Responding actively to market price fluctuations


Responding actively to market price fluctuations
Assoc. Prof. Dr. Nguyen Van Nam

In your opinion, what causes the prices of many goods and services to increase at the end of the year?

We all see that the price of oil and gasoline on the international and domestic markets are both increasing, many input materials for production and business of enterprises have also increased sharply, while the price of international transportation has increased significantly at a high level.

This situation has been the general trend of the world in the past few months. In fact, developed countries such as the United States and Europe are all facing high inflation pressure, with some countries increasing sharply to over 6%, China is facing the risk of an energy crisis.

Moreover, in the third quarter, the outbreak of the pandemic caused many production activities to be halted, domestic and international supply chains broken.

When the economy recovered, businesses returned to operation and circulation, massively buying raw materials, using energy and gasoline, while the inventory is limited, so there are not enough goods. Many enterprises producing input materials still maintain the “inertia” of producing a small quantity of goods as in the peak of the social distancing, causing demand to exceed supply and causing prices to rise.

How is the above situation affecting the activities of domestic enterprises, sir?

Although these are all objective reasons, this situation has had a profound impact on the production and business activities of domestic enterprises. In Vietnam, many businesses do not anticipate this situation or do not have a high reserve of goods, the more serious the impact will be.

Moreover, due to the increase in input materials, the sudden increase in output prices affects product prices and damages credibility with customers and partners, so many businesses have to accept losses and not increase prices.

However, in the opposite direction, in fact, there are still many businesses that benefit from the increase in the price of goods and raw materials, that is, petroleum trading enterprises, raw material production enterprises or other enterprises in the field of forwarding, transportation. This shows that the impact lies in the operation and business strategy of each enterprise.

Overcoming and proactively responding to the above situation, could you tell us what changes should businesses make?

The level of initiative of Vietnamese enterprises has so far been limited, because the level of management and corporate governance is not as good as that of enterprises in developed countries.

Moreover, businesses have not yet set out a long-term plan or reasonable backup strategy. Leaders of enterprises do not have a strategic vision, so they will be passive before changes in the external economic context.

The advantage of Vietnamese businesses is that they have a flexible response to all situations. So I hope Vietnamese businesses will quickly find solutions to overcome the impacts. Moreover, when the economy recovers, the production rate returns to normal, and the supply is abundant, the prices of goods and services will decrease, supporting businesses in the production season at the end of the year and beginning of 2022.

Vietnamese businesses must change, strengthen the connection between businesses and enterprises, between enterprises and management agencies to be proactive in all situations. Enterprises must raise their management level, must have forecasts, longer-term preparation plans, at first it can be from three to four months but must have a plan up to one year.

Along with businesses, regulatory agencies must also help. Accordingly, the authorities must give forecasts and warnings to businesses in a timely manner, although this is not easy because the fluctuations of the market are very unusual, not according to the rules.

Moreover, relevant agencies need to manage commodity prices and inflation in a flexible and proactive manner, thereby supporting businesses to stabilize production.

Thank you very much!


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