According to Dr. Nguyen Duc Thanh, Director of Vietnam Institute for Economic and Policy Research, although the inflation is eased in the first quarter, the pressure on inflation is still substantial due to the above reason. Especially in the context that GDP grows at a rate considerably lower than the targeted figure set forth by the National Assembly.
It will be challenging for the inflation rate in the following months to drop lower than 4% when the consumption demands rise again, commodities’ prices in the world continue to recover and public services’ prices are adjusted according to the stated plans.
Inflation is attached to service prices, but according to the economist Vo Tri Thanh, the biggest challenge that Vietnam faces for the time being is electricity tariff revision. From now until 2020, there will exist no other ways than conventional power generation resources in Vietnam. Wind power and solar power may be made available but with a very small proportion. In order to satisfy the economic growth rate and residential needs, Vietnam will keep relying on thermal power generation. However after 2020 and further later, Vietnam will have to find ways to progressively replace conventional power resources with clean energy resources. To this end, a remarkable capital amount will be needed for investment, and only with electricity tariff increase can domestic and foreign investors be attracted to invest in power infrastructure projects.
Dr. Vo Tri Thanh said: “We have suppressed electricity tariff over the two recent years and this is a very big challenge this year. We may postpone revision of public service price, particularly medical services, but it is very challenging for us to further postpone revision of electricity tariff”.
Sharing the same opinion with Mr. Vo Tri Thanh, Mr. Truong Dinh Tuyen, former Minister of Trade views that the Government should choose to procrastinate revision of medical service price and revise electricity tariff. Without such electricity tariff revision, it would be very difficult to call for investors to invest in energy projects, especially renewable energy projects. Without electricity tariff revision, it would be also very difficult to guarantee sufficient supply sources when the electricity consumption amount is constantly increasing.
We have "curbed" electricity tariff over recent years, if we continue doing that, it will be very hard to secure adequate investment capital in power development, thus it will be more difficult to invest in clean energy resources. We can’t procrastinate electricity tariff incresae until next year because if we do so, the inflation pressure will be exaggerated.
“At present the Government has not made decision on this matter, however in my opinion, with the view to harmonizing the electricity tariff increase and inflation, revision of medical service prices should be postponed and revision of electricity tariff should be done this year. Otherwise, inflation in 2018 will be much higher”, said Mr. Truong Dinh Tuyen.