High price of petrol takes its toll in South-East Asia

: At the cheapest fuel station in Phnom Penh, tuktuk drivers wait for an hour for LPG (liquefied petroleum gas) and one of them feels nauseous.

“The app companies and the ministry are corrupt!” he shouted.

It’s unclear what kind of corruption he means. But he is angry. And it hurts. And like several dozen other motorists waiting in their vehicles, the three-wheeled, low-speed people movers ubiquitous in Southeast Asia also went bankrupt.

At the time of this imprint’s visit, even at this outlet, LPG prices had doubled to over $1.50 per liter. Regular “92” fuel for cars and motorcycles goes for about $2, half the price of a good dinner.

The Cambodian government has moved to lower various fuel taxes, but drivers don’t seem to see or feel it. “I haven’t seen a single ministry take action to help tuktuk drivers,” the angry man said again.

Hun Borin is also next. He provides for his wife, two children and his mother. He says that they share one kilo of meat a day, extending it to breakfast, lunch and dinner. Now they’ve cut that in half.

Since Iran’s virtual closure of the Strait of Hormuz, a vital transit channel through which 20 percent of the world’s oil and liquefied natural gas (LNG) passes, some days it spends its entire daily income on gas.

The good ones go home with the equivalent of about $7. “And that’s just enough for my basic needs,” he says. “I have nothing left for my wife and children. Because LPG is so expensive, sometimes I can only give her 10,000 Riel ($3.60).”

A complete crisis

Fuel shock is plaguing Australians. For some of Southeast Asia’s poorest people, this is a disaster.

About 120 million of the bloc’s nearly 700 million people currently live below the poverty line, according to a 2022 paper. Journal of Economics and Development Studies. The World Food Program estimates that the crisis will push another 9 million people into acute food insecurity across Asia, which consumes 80 percent of the oil passing through the Strait of Hormuz.

Governments that have subsidized and capped fuel prices face a choice: provide more aid or blow up already strained national budgets. Thailand lifted the cap on diesel and allowed the pump price to fluctuate. The Philippines declared a national emergency and turned to pariah Russia for oil.

Analysts say the region’s least developed countries, Cambodia, Laos, Myanmar and East Timor, are more vulnerable, in part because of their dependence on fuel imports and the limited capacity of both individuals and governments to cushion shocks.

from the ISEAS-Yusof Ishak Institute in Singapore. “At the macro level, the rise in the general price level affects the poor more than others. This is what is meant by the phrase ‘inflation is essentially a tax on the poor’,” says Jayant Menon.

“Due to limited financial and other resources, poor countries tend to have lower fuel reserves and therefore supplies…are depleted faster.”

Heng Sokchea, a pork seller in Phnom Penh’s Doeurm Kor market, says his suppliers have increased prices due to transportation costs. “But I don’t dare raise the price immediately for my regular customers,” he says.

“Sometimes I even sell it to my regular customers for the same price I bought it for. Simply put, [high fuel prices] It affects everything, including the energy spent selling before dawn. “Sometimes my husband and I walk away doing nothing but tired.”

Um Pov, who sells vegetables on the side, says that he works from morning to evening and now only earns $4 for home.

Cambodia imports all of its fuel, and Vietnam and Thailand traditionally provide more than half of the fuel. However, Thailand stopped this trade with the outbreak of war with Cambodia in July. Vietnam is restricting supplies for its own struggling population.

Some stations were closed because fuel was not available. They seem to have mostly reopened in Phnom Penh but aren’t too busy because fewer people are driving or just looking for the cheapest options like tuktuks. Modest relief came in the form of fuel shipments from Singapore and Malaysia.

Drivers say app companies such as Uber for tuktuks have increased fares equivalent to 7 cents per kilometer to help cover rising costs. The problem is that this turned off customers.

“Some passengers will even call the company to complain if the price is only 100 Riel. [about four Australian cents] or 200 Riel more than they expected. As drivers, we face the risk of the company blocking us from the app,” says Khoeun Sokhoun, another driver waiting.

‘When gas increases, everything follows’

The crisis has spread across Cambodia, to the village of Trapeang Khnar, about 70 kilometers south of the capital. All but three of the 132 families here grow rice. Originating from small paddy fields, jasmine may have even found its way onto your dinner plate in Australia.

While fertilizer is not yet a problem, farming costs have increased by about 30 percent due to the price of diesel, says village chief Hou Sophal.

People reduced food. Others openly talk about defying Cambodia’s smoke-free village policy and turning to charcoal and wood for cooking.

“Every family faces extreme challenges,” says Sophal. “The first challenge is the price of fuel. The second is that we have a lot of expenses; we have weddings and religious holidays in the Khmer tradition that require significant expenses… and when the fuel runs out, everything else follows.”

“But the most critical issue is that people owe money to banks. When they receive their salaries, they have to pay them to the bank first, leaving very little left.”

Younger generations often work in factories, sewing for global brands. The chief’s fear is that high fuel costs will close factories and “our children will be unemployed.”

A nearby factory produces jackets for the Helly Hansen brand. They retail for up to $950 on the Australian online store.

Sambath Sakphea is a 20-year-old mechanized sewer worker who commutes to work by motorcycle for US$208 ($302) per month. He now receives an additional $2.50 a month from the government to help pay for gas.

But that’s not enough, “and I’m running low on money,” he says.

Similarly devastating price increases were recorded in neighboring Laos. At one point last month, two of the five gas stations were closed, according to media reports. Regular fuel in the capital Vientiane remains above $2.50 a liter; This is almost twice the pre-war price.

Tadam, who owns a restaurant on the outskirts of Vientiane, says he has never heard of Donald Trump or Benjamin Netanyahu. He knows that a distant war in the Middle East is tearing apart the local economy.

The family has a $23,000 loan at 5 percent interest for repairs to their home and business after the big storm on March 22. The storm caused the largest, wildest hailstorm ever seen in Vientiane.

Those strapped for cash, including his family, hired desperate, cheap general laborers or called in their brothers, sons and cousins ​​instead of professionals to replace the destroyed tin and tiles. He only recently managed to pay off the small loan that enabled his family to close down due to the Covid outbreak. “I worry a lot about this loan if people don’t have money to come and eat,” he says.

worst case scenario

Dr. from ASEAN and East Asia Economic Research Institute. Han Phoumin says a long-term recession is not the base scenario at this stage.

“In the best case, the disruption is temporary and oil prices stabilize, resulting in essentially moderate inflation increases and manageable fiscal impacts,” he says.

“In a worst-case scenario, prolonged disruption of supply routes such as the Strait of Hormuz could lead to higher oil and gas prices, leading to stronger inflation, fiscal pressure from subsidies, weakening currencies and slowing growth.”

Cambodian village chief Hou Sophal was “disheartened” by the war. What are USA and Israel? doing it in the Middle Easthe says it was an act of “cruel greed”.

“Just because Donald Trump leads a global superpower, he shouldn’t interfere with smaller countries, bully them, and cause them to suffer,” he says. “It must be facilitating peace… no one is at peace right now.”

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