Businesses decry hike
FE Report | Thursday, 3 July 2008
Country's business leaders have expressed grave concern over the latest hike in petroleum prices saying that it would enhance cost of production in industries and agriculture sectors, leading to further increase in commodity prices across the country.
Life of the fixed income group, including the middle class, and poor would be more difficult due to the fuel price hike, leaders of the Dhaka Chamber of Commerce and Industry (DCCI) and the Bangladesh Garment Manufacturing and Exporters' Association (BGMEA) observed Wednesday while giving their reactions to the latest fuel price hike.
The government Monday last raised the petroleum prices by 33.84 per cent to 50 per cent to offset the impact of overheated international oil market on the domestic economy.
In a press statement Wednesday the DCCI suggested formation of two separate taskforces -- one for offsetting the negative impact of oil price increase on the economy and the another for ensuring the country's energy and food security in the coming years.
The taskforces concerned, consisting stakeholders from both public and private sector, would monitor impact of rising fuel prices on agriculture and industries and take necessary steps so that the manufacturing costs remain within expected limit, the DCCI suggested.
The taskforces would also ensure reaching of adequate and necessary subsidy to farmers and small and medium enterprises, the chamber said.
They will also take measures to reduce fuel costs, the DCCI suggested.
Quoting a recent statistics, the DCCI said around 400,000 people will go beyond the poverty level as inflation is set to increase by 1.8 per cent due to 40 per cent hike in petroleum prices.
Poverty rate will increase by 0.38 per cent and 0.31 per cent respectively in urban and rural areas respectively due to rise in the prices of diesel and kerosene, the DCCI said in a press statement Wednesday.
Employment opportunities might decrease due to hike in petroleum prices as many industries might lose competitiveness due to the rise in cost of production resulting in a possible degradation of relationship between owners and employees, the DCCI feared.
The DCCI also sought energy conservation policy and demanded increased use of alternative energy like solar power, biogas, waste and wind power.
The chamber body was also concerned over a possible hike in electricity and gas tariffs and termed it as yet another blow to the poor.
It, however, urged the government to consult with the industry owners and businessmen before the hike in electricity and gas tariffs.
In a press conference, the BGMEA leaders said production cost in the garment sector will rise at least by 15 per cent, equivalent to Tk 7.0 billion a year, due to the hike in diesel price.
"Garment units have to use diesel very often to run their power generators in the factories because of erratic power supply," acting BGMEA president Shahidul Islam said.
He said the country's garment units will face fresh challenges due to the sharp rise in fuel prices.
"It is really a threat to our sector. I think a large number of factories might face closure due to the sharp rise in diesel price," he said.
The country's garment units will require an additional amount of Tk 500 million each month only to run the diesel-run generators as about 400 litres of diesel are usually used in each of the 2800 garment units.
Besides, cost of plying diesel-run covered vans will rise by Tk 1.0 billion a month, he said.
The covered van owners would charge the additional fuel costs for transporting their items from the garment owners, the BGMEA leader feared.
Some 800,000 covered vans are regularly engaged to carry garment items, imported fabrics and other accessories to and from Chittagong, he said.
To offset the negative impact of rising fuel price the BGMEA leaders urged the government to keep the diesel price at previous rate of Tk 40 per litre for the garment factories.
Life of the fixed income group, including the middle class, and poor would be more difficult due to the fuel price hike, leaders of the Dhaka Chamber of Commerce and Industry (DCCI) and the Bangladesh Garment Manufacturing and Exporters' Association (BGMEA) observed Wednesday while giving their reactions to the latest fuel price hike.
The government Monday last raised the petroleum prices by 33.84 per cent to 50 per cent to offset the impact of overheated international oil market on the domestic economy.
In a press statement Wednesday the DCCI suggested formation of two separate taskforces -- one for offsetting the negative impact of oil price increase on the economy and the another for ensuring the country's energy and food security in the coming years.
The taskforces concerned, consisting stakeholders from both public and private sector, would monitor impact of rising fuel prices on agriculture and industries and take necessary steps so that the manufacturing costs remain within expected limit, the DCCI suggested.
The taskforces would also ensure reaching of adequate and necessary subsidy to farmers and small and medium enterprises, the chamber said.
They will also take measures to reduce fuel costs, the DCCI suggested.
Quoting a recent statistics, the DCCI said around 400,000 people will go beyond the poverty level as inflation is set to increase by 1.8 per cent due to 40 per cent hike in petroleum prices.
Poverty rate will increase by 0.38 per cent and 0.31 per cent respectively in urban and rural areas respectively due to rise in the prices of diesel and kerosene, the DCCI said in a press statement Wednesday.
Employment opportunities might decrease due to hike in petroleum prices as many industries might lose competitiveness due to the rise in cost of production resulting in a possible degradation of relationship between owners and employees, the DCCI feared.
The DCCI also sought energy conservation policy and demanded increased use of alternative energy like solar power, biogas, waste and wind power.
The chamber body was also concerned over a possible hike in electricity and gas tariffs and termed it as yet another blow to the poor.
It, however, urged the government to consult with the industry owners and businessmen before the hike in electricity and gas tariffs.
In a press conference, the BGMEA leaders said production cost in the garment sector will rise at least by 15 per cent, equivalent to Tk 7.0 billion a year, due to the hike in diesel price.
"Garment units have to use diesel very often to run their power generators in the factories because of erratic power supply," acting BGMEA president Shahidul Islam said.
He said the country's garment units will face fresh challenges due to the sharp rise in fuel prices.
"It is really a threat to our sector. I think a large number of factories might face closure due to the sharp rise in diesel price," he said.
The country's garment units will require an additional amount of Tk 500 million each month only to run the diesel-run generators as about 400 litres of diesel are usually used in each of the 2800 garment units.
Besides, cost of plying diesel-run covered vans will rise by Tk 1.0 billion a month, he said.
The covered van owners would charge the additional fuel costs for transporting their items from the garment owners, the BGMEA leader feared.
Some 800,000 covered vans are regularly engaged to carry garment items, imported fabrics and other accessories to and from Chittagong, he said.
To offset the negative impact of rising fuel price the BGMEA leaders urged the government to keep the diesel price at previous rate of Tk 40 per litre for the garment factories.