Thaisoviet : Commerce Ministry mulls controlling profit margins

My readers probably know that I like to use 2 -affectionate- nicknames for Thailand. “Wonderland” for political and social issues. And “Zimbabwe” regarding most of the economic policies of the government.

Sometimes I use “White Rabbit hole” too, but only when I’m in a very good mood.

Well, I just found a new one : Thaisoviet. 😉

Consider this piece from Nation :

The profit margins of consumer-goods manufacturers could be controlled if the Commerce Ministry gets its way as part of its plan to curb inflation and relieve consumers’ cost burden.

The move followed requests by several companies’ to raise prices. Internal Trade Department director-general Yangyong Phuangrach said the ministry was studying three scenarios for controlling goods prices.

Under the worst-case scenario, we would limit not only the price ceiling of essential products, but also profit margins, in order to ensure fair practice for consumers,” he said.

Previously, the ministry calculated the price ceiling of essential goods but decided to leave profit margins intact.

Surely, we could say that the bureaucrats “working” on such scenarios have no clue, whatsoever, of the “meaning of life” as the Monthy Python used to say…

And that they are probably a bunch of bored and boring marxists, with Zimbabwean bias. Fair enough.

However, still, it says a lot about the current “state of mind” of the authorities…

And i would like to add that actually the difference between controling prices by “controling costs” or “controling margins”… is tiny ! Eventually, it’s exactly the same -twisted- logic.

It’s just as inane, counterproductive and idiotic.

A small example :

-your factory manufactures toy in plastic and you sell them 100 THB a piece. The cost of plastic per toy is 70 THB. All the other costs, per toy, represent 10 THB, leaving you with a huge profit (you dirty capitalist sucking our blood) of 20 THB a piece.
Life is good.

-now the cost of plastic per piece suddenly increases by 15 %… 10 THB more… total 80 THB … meaning your profit is divided by 2 (10 THB only).
Life becomes miserable. You have to increase your selling price at 110 THB.

-bureaucrat number 1 tells you : “Khun Manager, you suffer from hallucinations, your total cost is not 80 THB but still 70, okay khrap. So you don’t have to increase your price… therefore you’ll continue to sell your toy 100 THB”.

-bureaucrat number 2, a little bit red faced probably because of the ingestion of Thai Whisky, arrives and tells you : “Khun Manager… I see that your profit is 20 THB, and that if you want to keep it, you have to increase the price of your toys at 110 THB because plastic costs went up. But it’s really not sanook, and it wouldn’t be popular… Therefore, I order you to lower your profit at 10 THB… Of course, that will lead you to keep your price unchanged… it’s magic, it’s exactly what we wanted you to do”.

In both case, your profit is divided by 2. And in both case, you feel miserable. 😉

It’s an example of the delicious thai rethoric that bureaucrats love to use.

1 Response to “Thaisoviet : Commerce Ministry mulls controlling profit margins”

  1. 1 fall 26 July 2008 at 3:31 am

    Under the worst-case scenario, we would limit not only the price ceiling of essential products, but also profit margins
    Then isn’t it exactly the same as what the PAD are demanding from PTT (aside from taking it back into big brother’s fold)?

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Thailand Crisis

Coup, Economic slowdown, Terror In the South... The situation is worsening in Thailand. Bumpy road like often before.

But this time, it's different.

The key to understand the present turmoil is the inevitable... succession of King Bhumibol.

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