VBC on price action

December 11, 2008 5:15 AM

The Business Association of Curacao (VBC) finds it ‘short-minded’ when administrators and politicians expect the private sector to lower their prices of goods and services, because the oil products are constantly becoming cheaper on the international market.

“They need to realize that the cause of the price increases in Curacao in 2008 cannot only be blamed on the increase of the international oil prices, but also on other basic materials and products and also domestic factors”, says VBC, who gives a list of what causes high prices in the private sector: import of foreign inflation, the increase of premiums for social insurances, the increase of the minimum wages with 18,4 percent, higher dues and retributions regarding work- and residence permits, more expensive electricity and postal services, and on top of that, the ‘always choking bureaucracy’.

For the VBC it is also the question ‘whether the effect of the local government measures is not stronger than the international developments’. “Another aspect is that the component ‘oil’ doesn’t have the same value in all the sectors in the compilation of the cost price: it is higher in the transport sector than for example in the trade.

As an example, VBC points out the tariffs of busses and taxis. The government has set tariffs for this sector that has ‘oil’ as an important part of the cost price. Now that the prices of oil products have dropped, the government is expected to adjust the maximum tariffs in this sector down. The question is, will they do that”, said the VBC.
The VBC says that ‘doing away with the price-disposition and the introduction of the law on economic competition and also the establishment of a regulatory board to supervise monopolies’ must have the highest priority.
“It is also recommendable that the government pursues a policy aimed at maintaining the buying power and –improvement. Creating productive jobs, having sound government finances, lowering the taxes, promoting competitive transport-, healthcare-, and utility tariff are important components in this.”

The VBC doesn’t have any doubt that entrepreneurs that have to deal with competition, will automatically lower their prices – ‘their market share will otherwise go to the competitors’. Where there are no markets and only maximum prices set by the government is being worked with, the government will have to watch that lowering of price. The VBC sees sound and fair competition as the most effective instruments to keep the prices of goods and services competitive.

(Source: National newspaper Amigoe)

9 December, 2008