The local business community has expressed strong opposition to any Government-imposed price controls in response to swiftly climbing costs on the retail market.
Chairman of the Barbados Private Sector Association (BPSA) Edward Clarke is warning that such stringent measures could result in commodity shortages on the local market if merchants are unable to get a fair return on their investment.
Over the weekend, the Prime Minister called on importers and retailers to re-evaluate their markups as an overall increase on the international markets continues to drive up costs on the imports-dependent island. While raising the possibility of price controls as a last resort, she called for merchants to provide “some transparency around here”.
The BPSA chairman is however contending that market competition is entirely capable of holding businesses accountable as consumers ought to seek the best available prices.
“Market forces are there to drive competition and that will drive pricing. Whoever can come out and provide the best service and the best prices will bring customers into their doors and that is what we need to see in Barbados. People need to demand a level of service and quality of product that is affordable, and that is what is going to drive good competition and produce proper price mechanisms,” Clarke contended.
“Price controls are not something that should be encouraged or supported. I don’t believe in it. I think that we should agree on a basket of goods that we will try to maintain a decent markup for the investor and ensure that that doesn’t get out of hand for the average person in Barbados. And that is something that we have been working with the Government on for a few years.
“Price controls may mean that some persons may not want to import those goods again. If you can’t get a fair return on your product or investments, why are you going to continue to bring in something that you can’t make a decent return on? Any investor in Barbados needs a return on their capital to just stay in business,” Clarke explained.
In a statement, the Barbados Chamber of Commerce and Industry, in an attempt to clarify its position on price controls, described any such measure as a “retrograde step”.
While acknowledging that the idea may sound “pleasing to some”, the chamber held fast to the belief that free markets should be influenced by demand and supply.
“The implementation of price controls has been shown to lead to lower supply and therefore potential shortages and the creation of black markets with highly-inflated prices,” the BCCI warned.
“Introducing price controls in Barbados may also suggest that local businesses are the cause of price hikes, even though, as well documented by international media, the primary cause of price increases is the rising costs of freight, raw materials, and finished goods across the world, which are beyond the control of the local private sector,” the statement continued.
Clarke has meanwhile rejected the notion of wide-scale price gouging as he called on proponents of the theory to present more compelling evidence. The business leader also expressed doubt about the credibility of online reports suggesting that the cost of living in Barbados has now climbed higher than some of the most expensive cities in the United States of America.
“There’s no doubt that the cost of living in Barbados is high. That is no secret. It has been high for many many years. This is not something that has developed overnight, but when you look at the cost of living in a small island state like Barbados versus a large US state, you are really comparing apples and oranges. You have to look also at the type of lifestyle and all of that,” Clarke explained.
“I don’t know where the data is coming from to support it. Certainly, I don’t think we have access to it, to see where this is being obtained from,” he added.
In addition to external factors, the BPSA chairman referenced numerous domestic contributors to the high prices including the recent minimum wage increase, high import duties and the overall increase in petroleum products.
Furthermore, Clarke noted that instead of seeking the volume of returns to which they are accustomed, many businesses are simply trying to recover enough costs to stay in business.
“There is a whole thought process where people believe there is a whole lot of price gouging in Barbados. I haven’t seen it. I have seen price increases, yes, but I haven’t seen price gouging. If there is price gouging, let’s put the facts on the table and see where there is price gouging… and if there are people in the private sector that are price gouging, the market will deal with them,” said Clarke.
“I believe there is a lot of emotion around it, but we have to see the facts and sit down and discuss the facts, and put them on the table. That is what the Chamber of Commerce is doing with the Ministry of Small Business and Entrepreneurship. They are working on it now and when they put that together, we will have a solid position to discuss and put forward,” he added.
(kareemsmith@barbadostoday.bb)
