High international oil prices have undermined Korean manufacturers by raising their production costs sharply and eating into profits, a poll showed Monday.
The survey of 300 companies nationwide conducted by the Korea Chamber of Commerce and Industry showed 81.6 percent of the respondents saying they were feeling the pinch of steeper oil prices.
Prices of the benchmark Dubai crude that make up roughly 80 percent of the country’s oil imports surged to $123 per barrel last Thursday from an average of $109 in January and $100 in September 2011.
Of the companies that were affected, 19.3 percent said losses were serious, with 62.3 percent conceding moderate damages.
The KCCI said small and medium enterprises were more seriously hurt by higher oil prices than large conglomerates. Of SMEs checked, 23.9 percent said that oil prices caused considerable losses. This is much higher than 9.4 percent of large businesses that said damages were significant.
The latest poll showed 50.2 percent of local companies suffered profit loss due to higher oil prices, with 39.8 percent complaining of fund shortages as they spent more on commodities purchases.
Manufacturers also said they were hurt by rise in prices that affected competitiveness of finished products.
The local chamber of commerce said 95.7 percent of manufacturers had no contingency plans to deal with rising oil prices with 78.4 percent claiming they are not able to reflect the rise in oil prices on finished manufactured goods.
It said 73.5 percent of South Korean companies predicted that oil prices will rise in the near future, with 16.7 percent forecasting it will remain at present levels.
Many companies, meanwhile, called on the government to lower taxes levied on fuel products to counteract the rise in oil prices, with others demanding the release of the government’s strategic oil reserves and cut in import tariffs.
“Of manufacturers polled, 57.4 percent called for lowering of taxes that make up about 50 percent of fuel costs in the country,” the KCCI said. (Yonhap News)
