00:00Economist Mariano Brown is warning that a sharp increase in energy costs could be difficult
00:07for manufacturers to absorb, particularly at a time when many businesses are already
00:12under financial strain.
00:14He says it is unrealistic to expect companies to maintain operations without cutting costs
00:20or passing the burden on to their customers.
00:24So if you're going to increase, when you make an increase in price by about 70%, that's
00:30difficult to absorb all in one.
00:33Now, the argument that the other side or the other government didn't do it or the other
00:37party in power didn't do it for 10 years, so therefore I'm going to increase everything
00:42in one.
00:42Well, when you do that, you risk shutdowns.
00:45He tells The Morning Edition that ongoing foreign exchange shortages further limit manufacturers'
00:52ability to manage higher input costs, compounding pressure on an already strained sector.
00:59Any time your costs go up, you pass them on.
01:01It's not what NGC is doing.
01:05If it's what NGC is doing, I think it's kind of unrealistic to expect any manufacturers are
01:10not going to do it too.
01:12And they have to exist in a competitive world.
01:15Now, the break on their passing on their costs, particularly in the export market, is going
01:21to be price sensitivity.
01:24And given the fact that when Landa and Dewego is short of foreign exchange, by definition,
01:29that's going to be a difficult pill to swallow for the country as a whole.
01:33Brown stresses that economic progress cannot be driven by energy price increases alone,
01:38arguing that meaningful growth requires fiscal initiatives and a clear policy direction, which
01:45he says is currently lacking.
01:47You have to ask yourself the question, is the government having a strategy for manufacturing,
01:53does it have a strategy for industrialization in that nature?
01:58And if so, what is it?
01:59Well, it can't be that you just simply increase the price of energy.
02:03There have to be some transitional provisions.
02:05They have to have some, if you want, some fiscal incentives to be able to support it.
02:10And so far, the minister has been silent on those.
02:14Nicole M. Romany, TV6 News.
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