Fuel Price Hike Sparks Concern Among Drivers

A 10 percent increase in fuel prices from 4,000 to 4,450 riels starts today, causing concern among drivers about the impact on their income
A person buys gasoline for his motorcycle in Phnom Penh, August 1, 2023.
A person buys gasoline for his motorcycle in Phnom Penh, August 1, 2023.

Fuel prices will rise from 4,000 riels to 4,450 riels from today until August 10, causing concern over the impact on tuk tuk and delivery drivers’ livelihoods.

The Ministry of Commerce announced the 10 percent price hike today, with tuk tuk and delivery drivers, sellers and an economic analyst claiming it will have immediate short-term impacts.

In addition, if the increase in fuel price continues until the end of this year, it will prevent Cambodia from achieving the projected 5.5 percent economic growth in 2023, said Hong Vannak, an economic analyst at the Royal Academy of Cambodia.

“It is not the Cambodian government who increased the price of gasoline and petroleum in Cambodia; the increase in fuel price in Cambodia is caused by the international market. OPEC (Organization of the Petroleum Exporting Countries) members reduce the quantity produced to keep the price of petroleum high,” Vannak said.

He added that Cambodia imports petroleum from other countries; it is not produced domestically. Even China and the US cannot persuade OPEC members to increase petroleum production.

Another reason is because of Russia’s invasion of Ukraine. Russia is one the main exporters of petroleum. Since Russia’s invasion started, the West and US have imposed sanctions against Russia.

He said, “Therefore, it affects Russia’s petroleum production; thus, it affects petroleum price in the international market. Consequently, it causes the fuel price to increase in Cambodia. In developed countries, the governments have larger budgets than developing ones; therefore, the governments can intervene to lower fuel prices.”

Vannak added, “In Cambodia, recently, the government has intervened to keep petroleum prices at around 4,000 riels. Regarding the 10 percent increase in fuel prices between August 1 and 10, this increase is high. But, I think the government has intervened to lower the price already.

“If we compare this increase of fuel price to the price in European countries, the 10 percent increase is almost the same in the US and lower than that in Europe,” he added.

Vannak speculated that there is no doubt that the hike in fuel price will affect those whose occupation involves driving, such as tuk tuk drivers, delivery people, and consumers. “If the fuel increases, the price of other goods will increase accordingly. As a result, this will increase the inflation rate,” Vannak said.

“Because, the increase in fuel prices will increase transportation and logistic prices; therefore, it increases the price of goods imported from other countries. If the price of goods increases, this will affect Cambodia’s economic performance,” he added.

“So, in this case, I think Cambodia will not be able to achieve the projected 5.5 percent economic growth this year. It is a huge obstacle for countries that rely on imported fuel.”

If the increase in fuel price continues until the end of 2023, Vannak said it will affect Cambodia’s economic performance, lowering economic growth. Thus, it will affect people’s living standards.

Tuk tuk driver, Sreng Thik, told Kiripost that the increase in fuel price is a burden for tuk tuk and taxi drivers because they have to pay a monthly installments to the bank. “Now it is hard to earn money,” he added.

“The increase in fuel price will affect everyone, not only me, including government workers. Therefore, to help the citizens, the government should intervene and lower the fuel price,” he said. “The increase in fuel price of 400 to 450 riels is too much. I think an increase in fuel prices of between 50 to 100 riels is not too high.”

Grab delivery driver, Kol Raksmey, 24, said that the rise in fuel prices will affect delivery people like him. “If the fuel price increases this much, it will affect me by lowering my income,” he added. “I would like the government to intervene and lower the fuel price because as a deliveryman the increase means that I have to pay a lot to fill my tank.”

Moreover, he has to spend money fixing his motorbike every month. “I think the gasoline price of 3,900 to 4,000 riels is acceptable because as a deliveryman, the cheaper the fuel price the better.”

Ry Roth Sophany, a 35-year old seller at KiloLek Buon Market, said she is worried that the increase of fuel price will affect the price of other goods. “Now, it is hard to earn money, not like before the pandemic. Now, I can earn only 30 percent of my previous income,” she said.

The goods that she sells in the market have increased up to two times in price. As a seller, she said she does not know much about how the economy works, she only knows that recently the price of goods has increased across almost all items sold in the markets.

The goods that she sells have increased up to 50 percent. For example, a bag of garlic cost only 80,000 riels to 90,000 riels in the past, but now costs between 14,000 riels and 15,000 riels.

She said, “The price has increased almost twice of the original price. This increase in price started in the past two months. The price of all items has increased, not only garlic but also vegetables. I am not sure whether it is because the price of transportation has increased that affects the price of other items I sell in the market.”

In the past, to fill her motorbike tank cost 12,000 to 13,000 riels. Now, it costs between 16,000 and 17,000 riels for a full tank.

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