Fuel levy increase to hit businesses, importers
by GIFT NDOLWANE
JOHANNESBURG, (CAJ News) – THE anticipated increase in the fuel levy during the Budget Speech later this month will place importers under increased pressure in already challenging market conditions, says Adam Orlin, Head of Investec Import Solutions.
The executive adds this will negatively impact South African consumers and businesses. Finance minister, Pravin Gordhan, will present the budget speech to Parliament on February 22. Gordhan announced a 30 cent increase to the fuel levy in 2016, taking it to R2,85.
“With several economists of the opinion that the price of petrol and the fuel levy will continue to rise this year, the knock-on impact this will have in the South African market will be significant,” says Orlin.
He noted the transport industry is already operating under low margins.
“So, any additional increases could be quite damaging,” Orlin says.
This is expected to see a further increase in transport costs as the industry attempts to mitigate the additional economic expenditures.
Importers, says Orlin, will therefore need to find more innovative ways of offsetting costs and pro-actively plan around this given their reliance on the transport industry for the distribution of goods from the ports of arrival.
The analysts says despite the negative sentiment around the fuel levy increase and the economic challenges it creates, there are nonetheless opportunities for importers to find even more innovative ways of using available technologies and other solutions.
“And while the risk to the collective pockets of South Africans is real, it should not be all doom and gloom as importers identify other ways of delivering value,” concludes Orlin.
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