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Increase in electric utility charges to hit garment sector
28
Oct '08
Vietnam has been facing severe electricity power shortages in the last few months due to which production schedules of industries has gone haywire. Now to add to the woes of the consumers, the electricity board in Vietnam has proposed a hike in utility charges.

The board has proposed a hike of 15.5 percent over the current charges for purposes of production and 16 percent for services sector. For consumption in households, the board has put up two options. Under the first one, there will be a 36 percent hike for the first 100 kWh consumed and for electricity used above that figure will attract an increase of 16 percent.

Under the second option, consumption has been divided in to seven slabs of 50 kWh each. The increase will be 27 percent for first level, 63 percent for the second level and 12 percent for the rest of the slabs.

The state owned monopoly utility provider has quoted surging input costs and shortage of funds among the reasons for effecting the increase. The proposal has been sent to the Ministry of Trade & Industry for consideration.

The proposal has met with a resistance and outcry from industry. Industry experts say that this proposal will break the backbone of the textile and garment sector since electricity cost accounts for as much 15 percent of all production costs and this increase coming at this stage when there is recession in global markets will be a double blow to the burgeoning industry.

They add that the need of the hour is for industry to be more competitive to tackle the economic crisis and the increase at this stage will take away the competitive edge needed to survive in global markets.

They suggest that the charges should be raised gradually in small amounts like 5 - 7 percent. A recent study has indicated that electricity utility charges have gone up by 170 percent since 1995, but consumer price index, aided by inflation has risen by 250 percent in the corresponding period.

Fibre2fashion News Desk - Vietnam

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