Oil price rises to severely impact businesses
Oil price rises to severely impact businesses
High global oil prices, which have seen petrol pump prices in Cambodia rise about 10 per cent since August 1, could “severely” affect the transport sector and push up the cost of production, industry players said.
Chea Chandara, president of Logistics and Supply Chain Business Association in Cambodia (LOSCBA), said the rising oil prices in international markets would impact all production chains, particularly oil-importing countries like Cambodia.
Because fuel is in demand in almost all areas, the impact can be “partially indirect” on business sectors and “partly direct”, for instance the shipping sector.
“For the transport sector, the impact is certain, as the profit for transport companies would be lower given the likely increase in the cost of transport,” he told The Post on August 2.
However, Chandara said petroleum prices have not reached a level that consumers cannot accept. “Shipping costs now are not as high as they used to be a few years ago.”
An announcement by the Ministry of Commerce states that the retail selling price of petrol from August 1 to 10, 2023 has been set at 4,550 riel per litre for regular EA92 (petrol with an octane rating of at least 92), up from 4,150 riel. The price for diesel is 4,450 riel per litre of diesel from what used to be 4,000 riel.
Ministry spokesman Pen Sovicheat told the media on August 1 that petroleum prices rose before the July 23 national elections but retail prices were not raised, following coordination between the state and private sector.
“If oil prices in the international market increase, the price of oil in Cambodia would also increase.”
Echoing Chandara, Cambodia Chamber of Commerce vice-president Lim Heng said rising petroleum prices are negatively impacting economic activities, as production requires electricity.
“If the rise in oil price is short-term, it does not matter, but if it rises [more] in the long term [two to three months], it may affect the production line, especially transportation and agricultural machinery that use fuel,” he said.
That being said, Lim Heng noted that factories or enterprises are less affected as most of the factories are powered by state electricity.
Prolonged high prices would definitely see commodity prices rise in tandem as the cost is added to production.
“For the export of Cambodian goods to international markets, I think it will have an impact because rising oil prices are now worldwide,” he said.
In the first half of 2023, Ministry of Commerce data showed that Cambodia reduced oil imports by 9.7 per cent, valued at $1.1 billion, compared to imports of $1.2 billion in the corresponding period last year.
The imports comprise four fuel types. Diesel valued at $651.85 million, down 8.04 per cent year-on-year, gasoline worth $390.98 million (down 5.3 per cent), aircraft fuel at $32.05 million (55.8 per cent) and fuel oil at $3.26 million (down 93.7 per cent).
