The total retail sales of goods and services in the first half of this year was estimated at US$68.5 billion, up 10.7 per cent over the same period last year.— Photo ndh

HA NOI (Biz Hub) — Purchasing power in the second half of the year could improve, if authorities manage to lower consumer prices by reducing fees for brokerage services and supporting capital for production.

According to the General Statistics Office (GSO), the total retail sales of goods and services in the first half of this year was estimated at US$68.5 billion, up 10.7 per cent over the same period last year.

However, excluding inflation, the growth was only 5.7 per cent, just equivalent of the rate in the five-month period, and lower than the four-month period's 6 per cent, that was showing signs of levelling off.

"A large chunk of consumers are tightening their belts. This will make it more difficult for producers to develop or expand the market," said market observer Nguyen Minh Phong.

Vu Vinh Phu, Chairman of Ha Noi Supermarkets Association, said that purchasing power would be at a standstill, and even if there was an improvement, it would be very modest.

"If the situation persists, it will probably cause stagnation in production, circulation and consumption," Phu said.

In an attempt to bolster purchasing power, Phu suggested that authorities create more jobs, reorganise delivery systems to lower brokerage service fees, counter goods smuggling and fraud and penalise those found indulging in market manipulations.

Any move to eradicate brokerage service systems must be focused, so as to reduce prices of consumer goods, Phong said.

"This, it is hoped will encourage people to spend more and manufacturers to do their jobs," he added.

Van Duc Muoi, Chairman of HCM City Food and Foodstuff Association, said that capital resource was another key problem that enterprises expected to get help with.

Experts have urged the central bank to cut the dong interest rate further, in order to ease the capital cost burden on businesses, especially small- and medium-sized enterprises.

Annual interest rates charged on privileged loans hover around 7 to 8 per cent. For the manufacturing sector, the rates are 9 to 10 per cent for short term loans and 10.5 to 12 per cent for mid and long terms loans per year. For dollar loans, popular lending rates are 3 to 7 per cent annually.

In a related move, economists have encouraged enterprises to make the most of the Government's support, such as designed lending packages for the agricultural sector, to revive businesses and boost purchasing power.

In the first six months, retail sales, which contributed three-fourth to the total value rose by 12.2 per cent – the lowest level among four components that included hotels and restaurants, retail sales, consumption and tourism services. Tourism services posted the highest increasing rate of 20.5 per cent.

Rising petrol and power prices and health-care services in HCM City added to the slowdown in spending.

Other indicators announced previously also showed that industrial production was also in difficulty with high inventories (nearly 80 per cent) in the first six months, coupled with a rising number of companies being dissolved or being forced to halt operations (up 16.3 per cent over the same period last year). — VNS