Posted on 24 Feb 2009
The new retail electricity rates for all power drawn from the national grid, averaging VND948.5/kWh, will take effect on March 1 under a decision signed by Prime Minister Nguyen Tan Dung.
The new price marks an increase of 8.92 per cent over current prices.
Deputy Prime Minister Hoang Trung Hai said during a press conference last week that any effect of the increased prices on economic growth would be limited to an estimated 0.3 per cent of the GDP, and that the higher rates would only cause the consumer price index to rise by about a quarter of a percentage point. The Government would take strict measures against any traders who try to take undue advantage of higher power costs to boost the prices of other goods, he said.
Reducing waste in generation and distribution of power, coupled with increasing investment in power infrastructure, would help create jobs during a tough period, the deputy Prime Minister said.
This year, 35-40 per cent of the price for the first 1-50kWh used for daily life will be subsidised. Households consuming from 51-100kWh will be charged at the new average price.
However, fears persist about the negative impacts of this move, including higher prices for consumer goods.
An official of the environment department in the Cuu Long (Mekong) Delta city of
The increase in power prices is expected to account for VND550 billion of the VND4.5 trillion in this year’s profits for Electricity of Viet Nam (EVN), the national power utility. EVN’s turnover this year is expected to reach VND16 trillion, with the higher prices accounting for around VND4.8 trillion. This means purchasing power for other products will go down by the same figure, according to Dr Nguyen Duc Thanh, head of the Centre for Economy and Policy Research, the Ha Noi National University.
There are suggestions to separate the functions of power production, distribution and transmission to clearly demarcate the cost of each and open up the way for a new competitive electricity market and break the monopoly of the EVN, whose activities cover all these.
To date investors in power production projects have to negotiate with the EVN on the price, but in the future it will perhaps turn into a power trading business, analysts have said.
Economy stalls expansion
Expansion plans of privately held businesses (PHB) are hampered most by falling orders, says a recent study by Grant Thornton International, Up to 49 per cent of PHBs globally rank it as a constraint, compared to 31 per cent last year. Twenty-five out of the 36 economies covered by the research placed reduced demand at the top of business contraints. Last year, this spot was taken by the dearth of skilled labour.
Among the countries surveyed,
While much of the world is worried about reduced demand and orders, there are several economies where the availability of a skilled workforce continues to be the major issue, with
Red tape (30 per cent) outranks shortage of finance (27 per cent) as a contraint on business expansion plans the world over.
"It’s clear that the impact of falling demand is being felt around the world as consumers become increasingly concerned about job security. Every PHB in every market has been affected differently by the economic downturn, often by circumstances completely beyond the control of the management team," said Grant Thornton Viet
"It’s important that the PHBs remain confident that they are in control of their destiny, that means being proactive, taking time to understand the specific issues affecting their business, and developing strategies that allow them to respond quickly to changes in the marketplace," he said.
Office project woes
The time has gone when office buildings achieved a high occupancy rate even before the construction was completed. Project owners are now facing hard times. "Office for lease" signs have sprung up all over
Analysts forsee longer payback periods and ongoing marketing efforts through the lifecycle of the project. They are urging project owners to be more flexible in dealing with the challenges posed by a crowded market. Landlord flexibility that accepts concessions can help attract better quality tenants, which will bring less risk of defaults and higher investment value, according to Marc Townsend, managing director of the real estate services firm CBRE. International branded companies will add value to the building as well. The flexibility should be shown via private incentives in lease clauses including free service charges or bank guarantees in lieu of advance deposits.
A seminar organised by the CBRE last week also indentified staying informed with up-to-date information, recognising and reacting quickly to new developments in the market as measures that would help landlords become competitive. About 200 participants at the seminar also heard that landlords should be realistic with rental rates. Focusing on getting a lease would be a better strategy than insisting on higher rental rates, the landlords were advised.
