Business worries over fuel price hike
Barely three days have passed since the increase in the price of petroleum products, but sharp reactions have been already voiced by various circles to the development. Farmers are getting jittery about higher costs of irrigation, locally manufactured farm inputs and movement of goods. Even kerosene, an essential for majority of rural households hasn't been spared the price increase at the same rate as the relatively solvent-to-rich users of other petroleum products would have to pay. Hasn't the former's numerical strength worked to their disadvantage?
The worries among the business community are more pronounced, not just because they are most articulate in voicing their concerns but also because their calculations are crossed. They are intensely working at the calculators to figure out where they will stand in the face of cost escalations in production, transshipment and doing business overall. They are consequently apprehensive of erosion of competitiveness in the external markets.
Export orders for garments accepted earlier on have been in the production process according to previous costing. But now, even with the increase in fuel price, the manufacturers may have to sell their goods at the previously negotiated prices. Thus, either their profit margin will dwindle or they will incur loss. This adverse prospect looms over the garment sector, especially in view of the fact that US and European economies are under considerable strain.
Industries such as rubber, cement and fertilizer are likely to take a hit from their cost of business going up.
With the food and transport costs of workers rising, the workers will demand higher wages and salary raise which would add to the cost of production.
Exporters taking advantage of currency depreciation is being talked of, but this is hardly an underpinning to cushion off the effects we can boast of. In fact, decline in taka value vis-a-vis dollar cannot be a welcome feature in terms of macroeconomic stability. However, there is a lot of sense in the government making the port more efficient and ensuring adequate gas and electricity supplies to the industries so as to help the businesses absorb the overall impact.