TCB and other issues
I am referring to the scrapping of Trading Corporation of Bangladesh as confirmed by the commerce minister recently in a meeting with businesses.
The decision goes to prove, Grand Alliance, despite being a left leaning government with a huge mandate, is ready to take some realistic market reform measures. They appear to have realised that creating public sector behemoths like the TCB in order to "intervene", is not a solution to some acute long term problems inherent in our very inefficient food and essential commodity market.
In the past, governments often resorted to the short term solution of deterring businesses by importing through the TCB, which in reality, hardly worked. Distorting the market place by creating one more inefficient, civil service run public sector trading body, to compete with already heavily syndicated private sector players was more of a propaganda tool then a realistic long-term solution.
Whilst scrapping the TCB was a good decision, totally taking the hands off the market would be even worse an approach if food prices are to be kept within reach. Our private players will simply not listen to government's wise warnings to make "reasonable profit". These businesses would do whatever it takes to keep their absolute control on the import and distribution of foods and its market. The syndicated players may even collude together to play short-term gimmicks by reducing price for a while, just to appease the new government.
The commerce minister must keep in mind that as much as the "goodness" of the "free market" will technically not allow syndicates to last long, it is one of the externalities of the same "free market". To keep the market genuinely "free", far reaching reform ought to be made to ensure competition is there. Just pleading the business leaders will not take us anywhere.
The government needs to establish a workable economist and lawyer led powerful competition agency that will ensure market competition is not hindered by these unscrupulous syndicates. This competition agency ought to have enough resources at their disposal to investigate and prosecute the cartel makers. In addition, the government needs to bring in the much waited Competition Act, and ensure new comers in the markets are not deterred by the Old Guard who have enormous social, economic and political muscle to threaten the players out and kill off competition.
A few years ago, a businessman friend of mine was complaining about some new businessmen who bought scrap ships from abroad at a cheaper price than him and was going to out do the rest. So I asked him what were they going to do with him. His response: "We will sit with the guys, 'murubbis' will warn them not to sell at a cheaper price as all of us would be affected. If they don't listen we might have to threaten them or worse.
If all of us don't "cooperate", how will we survive?" Ever wondered why price of metal rods and building materials are always high even when the price drops in international market?
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