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Published on July 13, 2007

Grocers are reducing their orders from Thailand, because traders find the prices too high.

"In the last two days, I have increased prices for all kinds of goods, because the value of the baht is higher, and I have to follow accordingly," said Noi, a wholesale grocer in Nong Duang Market.

She explained she was paying 283 kip to the baht on Tuesday and needed to increase the price of each item in her shop about 500-1,000 kip.

Noi usually sells a pack of milk for 7,000 kip, but yesterday she raised the price to 7,500 kip. Sugar also increased in her shop, from 5,500 kip a kilogram to 6,000 kip.

Tuesday's exchange rate offered by the Banque pour le Commerce Exterieur Lao was 281 kip to the baht, compared with 279 kip on Monday.

Exchange rates on the black market were slightly higher on Tuesday: 282 kip to the baht.

One shopper in Vientiane, Latsamy, said the price of consumer products in the markets had increased daily and that traders always said the baht would keep strengthening, so if they did not raise their prices, they would lose money.

Local producers in Laos importing raw materials from Thailand have also been affected by the exchange rate.

Souvanna Phommavong, manager of a plastic-bag factory, said production costs had become more expensive, due to the cost of raw materials from Thailand.

He said he previously paid 9.6 million kip a tonne for raw plastic from Thailand but now paid more than 11.5 million kip a tonne. Even though the baht price of the material remains the same, when he uses US dollars or kip to pay for products, the price is higher.

He said even though production costs were more expensive, he would still keep selling his goods at the same price, explaining that many companies had not raised their prices, in order to be competitive, so a smaller profit was better than none.

Central-bank governor Phouphet Khamphounvong said the bank was looking for a way to deal with the problem and urged people to try to buy more domestic products.

Vientiane Times

Asia News Network