Thursday, October 27 2016


Prices go up but rarely go down

Update: September, 22/2015 - 09:55

Economic expert Ngo Tri Long spoke with Kinh te&Do thi (Economic and Urban) newspaper about transport firms who are always quick to increase their fares, but slow to let them fall again.

Petrol prices have continuously fallen in recent times, but transport firms have rarely reduced their freight rates or reduced them in dribs and drabs. This is not the first time this has happened. Could you tell us why?

Petrol and oil accounts for between 25 and 40 per cent of transport fares, apart from other fees for parking, tolls on roads and bridges, wages and other overheads. As a result, falling petrol prices should lead to a reduction of transport fares. This is an obvious and proper expectation by passengers and customers.

I think that one of the reasons for the slow falls in prices are complicated procedures. The current procedure doesn't create favourable conditions for enterprises to change their fares.

Enterprises must advise of the price changes and do many other things before they get permission. Then they must make a list of all their fares and print new fares. Thus, most ignore registering lower fares, saying that they need time to complete the procedure.

It sounds like price management actually helps enterprises delay reductions in fares?

For enterprises, the longer they keep their high fares, the more profit they get. Thus, they are willing to blame the complicated procedure to postpone fee cuts. But with the same procedure, they are very quick to increase fares.

Do you think that few penalties for those who deliberately slow the introduction of lower fares contributes to the situation?

The problem is not about light penalties, it's about how severely and strictly authorised agencies inspect and fine violators. All violators must be publicly penalised as a way of warning others and assuring that customers benefit.

Last month, Ha Noi's Department of Finance sent a document requiring transport firms, especially those who own buses on fixed routes and containers for freight transport, to re-examine input costs and focus on lowering petrol prices.

Nearly 200 transport firms signed a commitment to adjust fare costs following changes in petrol prices.

Some say it's necessary to create a competitive environment for transport fares for enterprises. What do you think?

In principle, to create fair competitiveness among enterprises in the market, the State should issue policies for private transport services such as Uber or Grab taxi to pressure traditional taxi services.

Moreover, the Ministry of Finance should inspect the prices of large transport firms and strictly fine those breaking the rules. This will be an effective warning to those delaying fare cuts. — VNS

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