Committed to PEOPLE'S RIGHT TO KNOW
Vol. 5 Num 865 Fri. November 03, 2006  
   
Front Page



Pricey essentials remained people's permanent plight
Minister changed yet Commerce went downhill


Changes to the commerce ministry portfolio twice did little help to curb the price hike of essentials during the BNP-led four-party government's tenure. The situation rather worsened further, making the life of the general public unbearable in the last five years.

The ministers holding the commerce portfolio always remained in the media limelight for their contradictory statements and other moves. They shitted from one policy to another without considering its impact, allowed syndicates to operate virtually unchallenged, and proved inefficiency in dealing trade not only at home but also in the global forums.

At the end of the alliance government's tenure, the Prime Minister's Office, especially the principal secretary to the PM, intervened in the activities of the commerce and other ministries to address skyrocketing prices. However, the move has so far failed to yield any positive results.

Besides, when negotiating skills play a vital role in protecting any country's interest in the changed global scenario, the government's policymakers ignored the issue of capacity building. As a result, Bangladesh was outperformed by other countries with similar interests.

Amir Khosru Mahmud Chowdhury was the first to go apparently for his failure to curb the price hike of essentials. The government on March 25, 2004 made Altaf Hossain Choudhury, whose charge of the home affairs earlier ended in failure, the commerce minister.

The situation deteriorated further during Altaf's term. In the face of severe criticism both from the public and the ruling parties, the government again on April 25 this year stripped Altaf of the portfolio.

Another fact that went against Altaf was his failure to properly deal with some key international trade issues. He was also blamed for his failure to protect the country's interest efficiently at international level, especially during the WTO meet in Hong Kong.

Whatever steps taken under Khosru did not bring any positive results later as Altaf lacked necessary capability to lead complex trade issues. Meanwhile, other regional countries had reaped benefits from the changed situation due mainly to their prompt actions.

Altaf was made a minister without portfolio and the then water resources minister Hafiz Uddin Ahmad was given the additional responsibility to look after the commerce ministry. The then adviser to the commerce ministry Barkat Ullah Bulu was also removed and made adviser to the Ministry of Women and Children Affairs.

These changes had been attributed to the staggering failure of Altaf and advise Bulu to rein in the price spiral. The removal came at a time when cross-section of people are highly dissatisfied with the government's performance as prices of some essentials including sugar and edible oil hit record high.

There were allegations Altaf and Bulu were serving the interests of the syndicates involved in controlling the market as well as prices of certain essentials.

Awami League (AL) lawmakers Shahjahan Khan and Mirza Azam alleged in parliament on May 3 that "syndicate of ruling alliance men" hiked sugar's price. They demanded an investigation into this and punishment to the culprits.

Responding to the allegations, Hafiz said, "We have come to know about the syndicates through newspapers. It will be investigated and necessary measures will be taken."

Initially, Altaf was stubbornly denying the skyrocketing prices of any essentials. The government-run Trading Corporation of Bangladesh (TCB) reported several times of a substantial price hike of essentials in a short span of time. But the ministry meetings chaired by Altaf often found the price situation not as "exorbitant as reflected in the media".

He also blamed the media for its negative role in highlighting skyrocketing prices of essentials. However, even the most obstinate marshals have to give in to reality at some point. So did Altaf, admitting at last that his ministry did not have the tools required to contain the soaring prices.

He however said, in an obvious attempt to excuse his office, "We do sit at inter-ministerial meetings to build coordination among the agencies concerned. But, as different market regulating agencies lie to different ministries, it often hampers our coordination measures."

So far so good, but the press was amazed when, in a childish contradiction to his own foregoing statements, Altaf 'dutifully' added the refrain that the four-party alliance government was "quite successful" in reining in the prices of essentials.

Many still believe the removed ministers are just scapegoats, the situation continued worsening day by day. Stripping Altaf of his portfolio might be a government strategy to earn easy popularity as the general election nears.

MESS IN TACKLING ESSENTIAL PRICES
The commerce ministry sat with representatives of different ministries, departments and other government agencies three to four months before the Ramadan every year. The objective was to ensure that all could play their due role in tackling rising essentials' prices. But the meetings failed to gain success, though it was not a seasonal issue.

There were differences between the commerce and the finance ministries regarding duty cut on some of items. When the commerce ministry made recommendations to reduce duty on a particular item, it was the finance ministry that had the final authority to execute those.

There are examples that commerce forwarded a duty-cut proposal in time but finance took decision much later. As a result, price of that particular item had already shot up unusually by that time.

The principal secretary to the prime minister at a meeting on September 3 this year asked the finance ministry to bring down taxes on 11 essential items, which are heavily consumed during Ramadan, to zero level. The commerce ministry sent a letter to the finance ministry with necessary recommendations the next day.

But then finance minister M Saifur Rahman strongly opposed the move, saying reducing tax is not the proper way to control prices of essentials.

However, India and Pakistan took different measures including cutting taxes and providing subsidies on importing some essential commodities as prices of those items went up sharply in the global market.

India reduced import tax on edible oil by 90 percent on August 11 and its price came down immediately. India imports four million tonnes of edible oil every year. Pakistan provided subsidy to gram importers this year as its price shot up sharply in international market in the wake of poor global output.

Bangladesh Rifles (BDR), which looks after security on the border, unofficially opened 20 different key border points so that rice, pulse, gram, onion, sugar and other essentials could easily be smuggled into the country. The move was to help bring the commodities' prices at a tolerable level. Sources said the BDR did it after receiving green signal from the very top level.

For the first time, the government involved the BDR in buying these essentials from bordering areas and selling them in the retail outlets in Dhaka. The government was apparently desperate not to allow the essentials' prices go beyond tolerable level during Ramadan as its tenure was set to expire on October 27 and the elections were due in January next year.

FAILED TCB DRIVE
After his takeover, Khosru kept the Trading Corporation of Bangladesh (TCB) dormant, encouraging the private sector. But Altaf engaged it again in import and sales of essential commodities, expressly to check the price spiral in 2005.

The state-owned trading agency again imported a good quantity of onions, grams, sugar and pulse ahead of Ramadan to keep their prices under control during the month of fasting.

But a mass of irregularities has rendered the move a failure and the consumers have not seen any positive impact of it on the soaring essentials' prices during Ramadan.

There was a different position on the TCB not only within the commerce ministry but also within the policymakers. Saifur Rahman felt that engaging the TCB to import and sell was 'dangerous'. As the private sector imports between 90 percent to 95 percent of the essential commodities, allowing the TCB might leave a negative impact on it.

"When the TCB imports, private sector is discouraged and stops imports that can create an unstable situation," Saifur explained.

On the other hand, Hafiz Uddin thinks the TCB should be kept out of the government rules and regulations so that it can import within short notice and respond to the market situation quickly.

Involving the BDR in open market sale this year has added a new dimension, but making essentials' prices tolerable for the mid and low-income group remains a far cry.

PLANNED WATCHDOGS PUT ON ICE
Khosru took steps to establish two new market regulators -- a 'consumer bureau' for monitoring domestic market and a 'consumer council' for protecting consumers' interests. These were supposed to start functioning by 2004 to help the government control the market of essential goods.

He left behind the draft documents for the twin regulators ready to be tabled before the cabinet, but Altaf could not make any visible progress further. His successor also failed to push ahead with the proposed "consumer rights protection act" lying for long with the law ministry for vetting.

Hafiz Uddin viewed his position "As I am here for the last couple of months, let things go as they are."

THOUGHTLESS NEGLECT OF TRADE THINK-TANK
The commerce minister's lack of leadership skill has clearly been demonstrated in the case of Bangladesh Foreign Trade Institute (BFTI), which Altaf headed as the chair of its board of governors.

The BFTI came into being in 2003 with an aim to fortify the country's international trade and investment capacity. It was meant to act as a think-tank, do research on trade issues and prepare position papers for Bangladesh on bilateral and multilateral trade negotiations, particularly at the World Trade Organisation (WTO).

But the institute has not been able to make any notable contribution to any of those fields due to a shocking dearth of manpower and finance that Altaf has done nothing to address or assuage. He has simply failed to lead and mould the newly established body into a definite shape.

Although the BFTI memorandum of articles allots it a 28-strong staff, it has been running since inception with a skeleton three-member staff comprising a junior administrative-cum-finance officer, a computer operator and a messenger.

There has not been any visible change after Hafiz was made commerce minister.

EXPORT DIVERSIFICATION REMAINS A FAR CRY
No significant progress has been made in diversifying the country's export basket and markets, though Bangladesh has been able to increase its export income by more than $1 billion in the 2004-05 financial year and over $2 billion in the last fiscal year, thanks solely to the burgeoning apparel sector and resilience of the private sector performing against all sorts of unfavourable business environment.

With a single sector, readymade garments, accounting for around 75 percent of it export proceeds, the degree of vulnerability of the country's export sector remains very high. The risk is so high also because the buyers, particularly from the US and the European Union, have been increasingly raising different compliance issues, prompting the country's leading exporters apprehend that the RMG sector is going to see a bad time ahead.

Exporters said most of the commercial counsellors at Bangladesh missions abroad have been appointed on political considerations and typically are not trained on how to promote the country's exports to prospective buyers. The commerce minister also failed to chalk out any specific plans for promoting Bangladesh's products in the global market.

However, the ministry during Khosru's tenure took a decision to call back some of the under-performing commercial counsellors. But it had to shelve the decision bowing to political pressures.

No action has so far been taken against any poorly performing counsellors, although almost half the 46 missions have been failing to achieve their export targets.