Costlier fuel to burden businesses, hit export competitiveness: Shams Mahmud

The latest fuel price hike will add to the cost of doing business and put further pressure on export-oriented industries already struggling with declining competitiveness, according to Shams Mahmud, the president of the Bangladesh-Thai Chamber of Commerce and Industry.

Talking to The Business Standard last night (20 September), he said, "As it is, all forms of business activities, including manufacturing, logistics, agro, service sector, and FMCG [fast-moving consumer goods], are going through stress in these turbulent times.

"International energy markets have recently been affected by the strikes in Saudi Arabia by Houthi rebels. Just today [Sunday], Saudi Arabia said next month's shipment of oil to Europe will be withheld."

"So we can anticipate future price increases. The government has taken the right decision as a policy to create a buffer for any price shock, especially about sourcing and subsidy," he said.

"But unfortunately, this will add a burden to the business ecosystem of Bangladesh, with inflationary pressure on the internal economy reducing disposable income. For export-oriented industries, which are already in a vulnerable state with decreasing competitiveness, it will add to the already increasing cost of doing business," said the businessman.

Also, the International Monetary Fund has been pressuring the government for a reduction of subsidies, and it may also have had an influence on the decision, as both parties will sit in Bangkok next month to work out the next loan from the global lender, he added.

The government last night increased the retail prices of diesel, octane, petrol, and kerosene by Tk20 per litre. The revised rates took effect today (21 September).

With the new price adjustment, this is the second time the BNP government has hiked fuel prices after assuming power in February this year. The last price hike was back in April.

The per-litre prices of diesel, octane, petrol, and kerosene have been raised to Tk135, Tk165, Tk160, and Tk155, respectively.