NESDB maps out energy strategy
THE NATIONAL Economic and Social Development Board will propose a three-point energy strategy for the government including speeding up tariff reform in light of the global oil price projection of US$60-$70 a barrel this year.
Industry Minister Chakramon Phasukvanich said yesterday that his ministry might review the country’s industrial cost structure if oil prices remain low until midyear.
The NESDB in its annual economic analysis report due to be released on February 16 recommends the government to bring down the costs and production factors for the farm sector to cope with the falling prices of oil and agriculture products and commodities in the world market, especially fertiliser, chemicals and farm equipment.
For farm products that have suffered price drops, such as para rubber, the government should urgently promote processing industries, the farm product insurance scheme and the application of the market mechanism for managing the risk from farm price fluctuations.
Second, the government should issue measures to support the export sector, particularly farm products that will experience a price decline and volatility in line with the global commodity price trend.
Third, it should control the prices of goods whose costs benefit from the falling oil prices in a bid to stimulate consumption. This is because the NESDB sees positive impacts from the falling oil prices, which will help ease inflation, increase household income, spur domestic demand and work wonders for the overall economy.
The NESDB advises the government to use this time of low oil prices to hasten its restructuring of the energy sector, making energy prices reflect true costs and the market mechanism.
It should “speed up the restructuring of energy prices to be able to utilise benefits from the reduction of the world’s crude oil prices, for increasing people’s purchasing power, reducing costs of business operators and giving better support to the economic recovery,” the report says.
The government should review its policy on alternative energy to make sure it won’t impose an “unnecessary burden” on the economic system, it adds.
Industry Minister Chakramon said if crude oil prices average $65 a barrel this year, manufacturing output, both for overseas and domestic markets, will rise by 0.41 per cent, thanks to lower costs.
Among the biggest beneficiaries are basic and other chemicals, plastics, paper and paper products, and food industries.
