VIETNAM: safety in transit - new law economics bite as helmet makers reap returns

HANOI: New nationwide safety laws mean all morocyclists must wear helmets. The deadline is 15 Dec 2007 and worried about police crackdown, customers rush to buy them, pushing up prices. There are benefits to being a first mover here and to being a canny stockpiler. Costs to late deciders, those with big heads [33% premium! - I pity all brainy Vietnamese economists!] and potentially those who flout this law. Will the risk of detection outweigh these inflated prices? I am sure some clever economist will be testing this out - please let me know the outcome! Important analytical questions include taxi fare rises, demand for taxis [cheap already], imports, illegal helmets, mock helmets, etc.

Helmet sellers take public for a ride from VietNamNet.

Safety helmets have increased in price by VND30,000-80,000, a jump of 30-40%, over the past two months, as customers rush to buy them in anticipation of the traffic law requiring their usage in December.

Customers rush to buy helmets as the December 15 deadline approaches for the mandatory helmet law. In response to the high demand for helmets, retailers have raised prices 30-40% in the past two months.Honda brand helmets cost VND290,000 each, up from VND170,000-180,000 in October while Protec helmets are going for VND165,000 to VND215,000 and Amoro VND95,000 to VND150,000.

Taiwanese-made helmets for children that have eye-catching sizes cost VND180,000 to VND210,000. Safety helmets will likely be even more expensive as people tend to wait until the last minute to buy them, said a distributor. Under a recent regulation of the National Committee for Traffic Safety, motorcyclists have to wear safety helmets starting December 15 when riding motorbikes on all roads and streets nationwide. The deadline is fast approaching, and more and more people are rushing to buy good quality helmets that many fear are in short supply.
It is next to impossible to buy a helmet for less than VND150,000, said Duong Huu Khanh, an employee at a navigation company.

He said an Andes brand helmet worth VND120,000 last month now costs VND180,000 for a small one and VND210,000 for a large one with sellers citing a supply shortage as the main reason. A number of Protec showrooms are currently out of stock as the firm reduces its distribution channels. Local distributors said an undersupply is unlikely given the huge number of safety helmets available from domestic and foreign sources.

Nguyen Hoang Anh, Protec’s deputy general director, said the company has been operating at full capacity with additional employees working to get orders finished by the end of the year. "The company produces an average of 1,500-2,000 safety helmets a day," he said.
Vo Van Duc Bay, deputy director in charge of business at Cho Lon Plastic Co, said the company distributes 1,000 helmets a day and will increase its supplies if demand surges. Sai Gon Plastics Joint Stock Co said the company is producing 10,000-15,000 helmets a month, but that capacity can reach 50,000 a month. People will not likely be left without safety helmets because corporate clients have ordered up to 80,000 for their employees, who would not have to buy one for themselves, said an executive of a joint venture firm involving the production of LH helmets.

Le Van Dien, sales director of Dai Viet Trading and Service Joint Stock Co., agreed, saying that in addition to 20,000 helmets in stock, the company markets 1,000-1,500 daily. Legally and illegally imported helmets are also available on the market. A HCM City-based importer specialising in importing helmets from the US and Taiwan said it had rented a warehouse months ago to stockpile helmets.