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Money will stimulate spending
Raising wages and reducing the cost of consumer products are the keys to stimulate Vietnam’s consumption.


Cash flow accounts for 60 percent of economic growth in Vietnam but the cash flow crunch has been making for a sluggish economy this year.

The country’s exports are facing difficulties because its markets have shrunk and products are no longer competitive.

Solutions to boost exports include opening new markets, lowering export duties and reducing bank loan interest rates to help exporters reduce their prices. Import duties should also be raised slightly.

To stimulate domestic consumption, the most important factor is to cut the prices, which are on average still 20 percent higher than last year.

Several electronics businesses have recently slashed their prices significantly and have enjoyed good sales as a consequence.

Many garment firms have used the same method.

At the same time, some businesses have tried to push their prices higher for the Tet shopping season, which increases the chances they will be losers in the year’s biggest shopping season.

For macro policy makers, one thing they can do to stimulate consumption is to raise the minimum wage.

First, this is the matter of fairness as consumer prices have increased by 20 percent year on year but wages have remained the same.

People just can’t spend more when prices have risen and their incomes haven’t.

By Ngoc Minh