The Nation reports:
The Thai Chamber of Commerce (TCC) yesterday called on the government to help bring down production costs instead of focusing on price-controls as it feared a protracted price freeze may retard economic growth in the long run.
The chamber also pointed out that any plan to allow imported goods to force down domestic prices, while benefiting consumers, could be a big mistake.
Such a move could hurt some domestic industries that cannot compete, the chamber said. For such sectors to develop, they need government protection.
The chamber urged the government to help find cheaper sources for raw materials, reduce logistics costs and increase wages, rather than control retail prices.
TCC vice chairman Dusit Nontanakorn yesterday said if private companies were forced to freeze prices too long, their businesses could run into trouble and that could spark a domino effect that would be negative for the economy.
Such a policy could also lead to hoarding and promote artificial shortages.
"The private sector agreed with short-term price controls but the government should seek other means to offset rising production costs to ensure businesses can continue to grow," he said.
If price controls are enforced too long, they are likely to curb production.
Should private enterprises feel the market is unstable, they may reduce production, he warned. In a worst case scenario, they could shut down.
Jit Siratranont, chairman of the retail and wholesale business committee at the chamber suggested the government can help locate cheap raw materials and develop better infrastructure to reduce inefficiency and wasteful costs.
BP: The headline sounded so promising. The government's price control measures are seriously worrying, but it is not like the price controls are something new. The Surayud government wouldn't allow price rises until the new government - yes, there were already price controls and prices were allowed to rise in January. This has lead with petrol price increases to a large increase in prices with the new government and has increased public pressure on the government - price rises/economic concerns jumped to the No. 1 concern in surveys.
From what I can discern from the Commerce Minister, Mingkwan, and his appearances on the various Thai political interview programs is that this is a short-term measure and prices will be able to increase in the second half of the year. Price rises are normal with increasing production costs. I would prefer the government stay completely out of it, but now given the large number of price rises all at once, I am resigned to a short-term price controls if the government coordinates to allow different sectors to increase their prices at different times this year to lessen the shock of sudden price rises everywhere all at once. The government is also reducing import taxes on raw materials and hopefully this can be extended to reduce costs. Hopefully, it will provide the political opportunity to reduce import taxes on a wide range of products leading to cheaper products.
btw, what is wrong with cheaper imports as TCCC. This would actually help. Some domestic industries just can't compete.
given the history of the thaksin gov't i doubt this is a short term thing. gov'ts in thailand generally don't have a really have a good record when it comes to letting the market set prices. price controls are here with us to stay. i'll believe your argument that they'll be phased out under this gov't when they introduce legislation to abolish the "internal trade department" of the ministry of commerce.
Tettyan: To clarify, yes, I would prefer that there were not price controls, but at the moment the government is becoming more involved. Now in 6-9 months, I still think the government will still be involved, but less so than now.