Panel unfazed by higher diesel cost

Panel unfazed by higher diesel cost

Producers unlikely to hike goods prices

An attendant fills a motorist's tank at a petrol station on Tuesday. Industry chiefs said a higher diesel price is unlikely to prompt manufacturers to raise goods prices.  (Photo: Chakkrapan Natanri)
An attendant fills a motorist's tank at a petrol station on Tuesday. Industry chiefs said a higher diesel price is unlikely to prompt manufacturers to raise goods prices.  (Photo: Chakkrapan Natanri)

Manufacturers are unlikely to increase the prices of goods if the government decides to allow the price of domestic diesel to exceed 30 baht a litre, following the expiry of a subsidy scheme using the Oil Fuel Fund on March 31, says the Joint Standing Committee on Commerce, Industry and Banking (JSCCIB).

Prime Minister Srettha Thavisin said on Tuesday he is waiting for the Energy Ministry to propose measures to regulate diesel prices.

The one-baht diesel excise tax cut is scheduled to end on April 19.

Biodiesel B7, which is blended with 7% palm oil-derived methyl ester, was still being sold at 29.94 baht a litre on Wednesday, in line with the government's plan to keep the price less than 30 baht a litre, according to media reports citing prices listed at PTT petrol stations.

If the government needs to increase diesel prices by 1-2 baht a litre, the JSCCIB would not oppose such a move, said Kriengkrai Thiennukul, chairman of the Federation of Thai Industries, a key member of the committee.

"We understand the Oil Fuel Fund has a huge financial burden after the authorities used it to subsidise the diesel price since September last year," he said.

As of March 28, the fund reported a loss of 98.2 billion baht, with 51.1 billion attributed to the subsidy for oil, including diesel and gasohol, and 47.1 billion for the liquefied petroleum gas price subsidy, according to energy officials.

Mr Kriengkrai said higher diesel prices would increase the logistics and operating costs of manufacturers, prompting them to consider hiking the prices of products and services.

"However, the JSCCIB does not think it is the right time to increase goods prices," he said.

"We believe manufacturers can cope with the situation."

Businesses will not increase prices of consumer products because the economy has yet to fully recover, said Sanan Angubolkul, chairman of the Thai Chamber of Commerce, another member of the committee.

The JSCCIB also repeated its plea to the Bank of Thailand to reduce the policy interest rate, noting interest rates in other countries are starting to decrease.

If the central bank cuts the rate, it would reduce financial costs for entrepreneurs, said Mr Kriengkrai.

"The Thai economy needs time to fully recover," he said.

"We need measures to drive the economy and an interest rate cut should contribute to economic growth and help businesses and households deal with financial burdens."

The JSCCIB asked the central bank in January to cut the policy rate, but the Monetary Policy Committee decided to maintain the rate at 2.5%, the highest level in a decade, at its meeting in February.

The committee on Wednesday maintained its GDP growth forecast at 2.8-3.3% for this year, with exports projected to grow by 2-3% and inflation expected to tally 0.7-1.2%.

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